July 18, 2007
ALLISON BRADFORD, PLAINTIFF-APPELLANT,
GEORGE GREGORIO, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, FM-13-000329-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 16, 2006
Before Judges S.L. Reisner, Seltzer and C.L. Miniman.
Plaintiff appeals from several provisions of an April 13, 2005, final judgment of divorce that resolved financial issues and from a July 11, 2005, order that denied reconsideration. We affirm in part and reverse in part.
We take the following facts, which are essentially uncontested, from the four-day bench trial and the judge's undated thirty-one page written opinion that was apparently issued on September 8, 2004. Plaintiff and defendant met in 1981. They began cohabiting in 1990 and are the parents of one child, Meredith, who was born on March 2, 1993. They were married on March 1, 1997. Meredith suffers from cerebral palsy and, as the result of a medical malpractice action, is the beneficiary of a trust, administered by the parties, with a value of approximately $1,200,000. The parties did not dispute that plaintiff should remain the parent of primary residence for Meredith or that defendant would be responsible for payment of child support.
In 2003, plaintiff earned "in excess of $80,000." In computing her net income for child support purposes, the judge reduced her "weekly caregiver expense of $450 . . . to $438 per week" to account for the tax benefit available as the result of the payment for her child's caregiver. The reduction had the effect of increasing her net income, albeit minimally, and was made despite the fact that the parties did not claim the tax deduction available to them.
Defendant, although unemployed for most of 2003, obtained employment in 2004, earning approximately $150,000. Given the actual salary of defendant, although post-trial, the judge declined to consider imputing income to defendant and used the gross income of $150,000 in fixing his child support obligation. The judge computed "[t]he net combined incomes [of] $1094 for plaintiff and $1905 for defendant [to be] a net total of $2999." The judge recognized that the child support guidelines did not apply when combined weekly net incomes exceeded $2900.*fn1
Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A, paragraph 20b at 2426; Appendix IX-G at 2498 (2004). Nevertheless, he concluded that the excess of $99 did not justify a deviation from the guideline amount and, at oral argument, plaintiff conceded that child support should be computed in accordance with the guidelines. In addition to the support computed, and in accordance with the guidelines, the judge ordered defendant to pay sixty-four percent of the marginal cost of insuring Meredith on plaintiff's health plan and other unreimbursed expenses.
The judge then turned to the equitable distribution issues. He noted that when the parties began to cohabit, "[d]efendant had a home in Washington Township and plaintiff in Hazlet. . . . Each party carried his/her own carrying costs until defendant rented his Washington Township home and resided full-time in Hazlet." The Washington Township home was sold after the marriage in 1998 for a gross price of $416,000 and defendant received net proceeds of between $200,000 and $250,000. Those funds were placed in a Fidelity Investment Account titled solely in his name. In August 2000, defendant purchased a house at 17 Redfern Court, Lincroft, New Jersey, in which the parties would reside until the divorce. He paid $725,000 for the Lincroft home, of which $325,000 was paid in cash. That cash payment came from the Fidelity Investment Account. Pursuant to a pendente lite order, defendant sold the Lincroft home for $960,000 and placed the net proceeds of $551,000 into his Fidelity Investment account.
Sharyn Maggio, a certified public accountant, was retained jointly to analyze the banking and investment accounts of both parties and to allocate the pre-marital and marital assets. The judge reported Ms. Maggio's conclusions respecting the Fidelity Investment Account: "[F]rom marriage to complaint, [defendant's] earnings in excess of $420,000 were deposited and same were post-marital; . . . the rentals and the house proceeds were premarital. Ms. Maggio concluded it was impossible to know what dollar paid for what."
When plaintiff sold her Hazlet home, she received approximately $62,000, which was given to defendant to pay off a margin account. The money was deposited by him into the Fidelity account and Maggio confirmed this disposition of the funds. Maggio, as the judge recognized, concluded that "plaintiff's transaction to him for the margin account was post-marital." The parties disagreed with respect to the nature of the transaction. The judge noted that, "it is clear that plaintiff wishes to treat the transfers as a loan while defendant seeks to treat the transfers as a gift or transfer of monies between spouses during marriage to [the] expenses of the marriage."
On this testimony, the judge concluded that the Fidelity account was a commingled account and subject to equitable distribution. He allocated thirty-five percent of the account to plaintiff. He reached that allocation from the corpus based on the factors in N.J.S.A. 2A:34-23.1. The cohabitation and marriage were of a modest duration; plaintiff is younger than defendant by fourteen years and can recapitalize longer than defendant; although defendant brought more property to the marriage than plaintiff, the swing up and down of defendant's Fidelity Investment portfolio was influenced by the market factors from 2000-2002 when untold fortunes were lost by shareholders in the bear market and technology market's collapse. The parties had no written agreement as to property distribution. Presently, both parties are employed and defendant is earning $150,000 and plaintiff in excess of $80,000. The court does not perceive that the earning capacity of either party will change dramatically in the foreseeable future. Neither made contributions to the other[']s education, training, or earning power.
The distribution, however, did not specifically deal with plaintiff's claims to the $62,000 that had been given to defendant and the judge did not distribute the proceeds of the marital home in Lincroft.
The last distribution issue concerned the value of a van which had been purchased by defendant with funds from his Fidelity account and placed in plaintiff's name. Plaintiff testified that the van had been damaged and suggested its value should be fixed at $6000. The judge, however, accepted defendant's claim that the van had a value of slightly more than $8000. We note the distribution to plaintiff would have increased by $1060, had her evaluation been accepted.
The judge required the parties to share equally in the cost of the joint expert and awarded plaintiff $14,749.80 which, defendant asserts without reference to the record, is one-half of the amount incurred by her for fees and costs. The judge also declined to order defendant to maintain life insurance for the benefit of Meredith. On appeal, plaintiff raises the following arguments:
THE TRIAL COURT ERRED BY FAILING TO REQUIRE THE DEFENDANT TO OBTAIN A LIFE INSURANCE POLICY TO SECURE HIS CHILD SUPPORT OBLIGATION.
THE TRIAL COURT ERRED BY FAILING TO EQUITABLY DISTRIBUTE THE PROCEEDS OF THE SALE OF THE MARITAL HOME.
THE TRIAL COURT ERRED IN ITS DISTRIBUTION OF THE FIDELITY ACCOUNT AND FAILED TO CONSIDER THE $62,000.00 LOAN FROM PLAINTIFF TO DEFENDANT.
THE TRIAL COURT ERRED IN ITS CALCULATION OF CHILD SUPPORT.
THE TRIAL COURT ERRED BY FAILING TO CONSIDER THE PARTIES' COHABITATION PRIOR TO THE MARRIAGE WHEN DETERMINING THE EQUITABLE DISTRIBUTION OF ASSETS.
THE TRIAL COURT ERRED IN THE ALLOCATION OF THE EXPERT ACCOUNTANT'S FEES.
THE TRIAL COURT ERRED IN ITS VALUATION OF THE VAN.
THE TRIAL COURT ERRED IN THE AMOUNT OF THE AWARD OF COUNSEL FEES TO THE PLAINTIFF.
We conclude that plaintiff's Points II and III are meritorious and reverse and remand for further proceedings in connection with the proceeds of the marital home and the transfer of $62,000 from plaintiff to defendant.
We consider first the court's failure to distribute equitably the proceeds from the sale of the marital home. Equitable distribution is controlled by N.J.S.A. 2A:34-23.1. That statute requires a determination of those assets eligible for distribution, followed by a valuation and equitable allocation of the eligible assets. Rothman v. Rothman, 65 N.J. 219, 232 (1974). "Where 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, supra, 65 N.J. at 233). When the dispute concerns the allocation of eligible assets, we are concerned with whether there was a mistaken exercise of the judge's discretion. Savoie v. Savoie, 245 N.J. Super. 1, 7 (App. Div. 1990) (citing Borodinsky, supra, 162 N.J. Super. at 444).
We recognize that, as a general rule, premarital property is immune from equitable distribution, as is "any asset for which the original property may be exchanged or into which it, or the proceeds of its sale, may be traceable." Painter v. Painter, 65 N.J. 196, 214 (1974). Nevertheless, to the extent an immune asset appreciates in value by virtue of efforts expended during the marriage, the contributing but non-owning spouse is entitled to share in that appreciation. Valentino v. Valentino, 309 N.J. Super. 334, 338 (App. Div. 1998).
The judge recognized these legal principles but did not apply them to the Lincroft property, which had been purchased after the marriage with funds from the Fidelity account. That account contained marital assets since, as the judge found, marital assets, including income derived during the marriage, were placed into it. In fact, the proceeds of defendant's Washington Township home amounted to no more than $250,000, and the deposit placed on the marital home in Lincroft of $325,000 was somewhat greater.
Moreover, it is reasonable to conclude on this record that mortgage payments, taxes, and maintenance expenses were paid from marital assets. We have held that contribution to the maintenance of an exempt asset entitling a non-owner spouse to share in the appreciation of the asset may take the form "of a mortgage pay-down during the marriage." Id. at 340 (citing Griffith v. Griffith, 185 N.J. Super. 382, 385 (Ch. Div. 1982)).
Accordingly, it is conceivable on this record that plaintiff would be entitled to share in the value of the home because marital assets were used to purchase it, at least in part. It is equally conceivable that she would be entitled to share in its appreciation because marital assets were used to maintain it.
Our analysis of plaintiff's entitlement is hampered by the judge's failure to discuss the issue of her interest in the home. In the absence of that discussion, we are unable to determine if the judge concluded that the marital home was not subject to equitable distribution or simply failed to consider it. If the former, we are unable to discern the basis for the conclusion that the entire proceeds of the home were immune from distribution.
We, therefore, remand to allow the judge to consider the issue, to make the factual findings and draw the conclusions of law required by Rule 1:7-4. In his consideration, the judge will, we are confident, be cognizant that the burden of proving an asset, or an increase in value of an asset, immune from distribution rests upon the person asserting immunity. Pascale v. Pascale, 140 N.J. 583, 609 (1995). If defendant cannot sustain his burden of proving that marital funds contributed neither to the original purchase nor to the appreciation in value, the judge should allocate the proceeds of the home equitably.
The same problem infects the judge's treatment of the Fidelity account, at least to the extent that plaintiff claimed a superior entitlement to what she characterized as a $62,000 loan given to defendant by her from her immune premarital assets. Defendant does not contest the claim that $62,000 was provided by plaintiff to him and used by him to reduce a margin loan for which he alone was indebted. Nor does defendant dispute the judge's finding that the Fidelity account, although owned by defendant before the marriage, was the depository for marital funds that were commingled with immune assets to such an extent that the funds could not be traced. Defendant does not, therefore, contest the judge's finding that the account is subject to equitable distribution.
The judge divided the Fidelity account,*fn2 thirty-five percent to plaintiff and sixty-five percent to defendant. At the time of the filing of the complaint, the accounts contained $305,182. Of that sum, $62,000, or roughly twenty percent, came from plaintiff. If that sum were a gift, the judge's allocation would have the effect of returning to plaintiff only thirty-five percent of funds entirely attributable to her premarital immune assets. Alternatively, if the $62,000 transfer from plaintiff to defendant was, as plaintiff testified, a loan of immune assets, she was entitled to a return of the $62,000, leaving $243,182 for distribution. The distribution to defendant ordered by the judge of $198,368 (sixty-five percent of $305,182) gave defendant eighty-two percent of the commingled account after the repayment of the loan.*fn3 The sum is substantially greater than the sixty-five percent he apparently intended.
In any event, the judge did not resolve the factual dispute regarding the nature of the transaction and, absent such a resolution, we are unable to determine if the judge abused his discretion in allocating the Fidelity account as he did. We, therefore, remand this issue to permit the judge to explain the manner in which he resolved the credibility conflict respecting the nature of the $62,000 transfer and to explain, in light of that resolution, the appropriate allocation of the account. If the judge did consider the transfer, we should be apprised of the manner in which the consideration affected his allocation.
Plaintiff's remaining arguments are without merit and require little discussion. In considering those arguments, we are mindful that family courts possess special "expertise in family matters," Cesare v. Cesare, 154 N.J. 394, 413 (1998), and that "an appellate court should not disturb the 'factual findings and legal conclusions of the trial judge unless [it is] convinced that they are so manifestly unsupported by what is inconsistent with the competent, relevant and reasonably credible evidence as to offend the interest of justice.'" Id. at 412 (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).
The judge's refusal to require defendant to maintain life insurance to secure his support obligation falls within the category of discretionary decisions to which we owe substantial deference. Although the judge did not specifically deal with the issue in his conclusions of law, it is clear that he accepted defendant's testimony "that life insurance . . . is too expensive." The judge had also heard, and apparently implicitly accepted, defendant's testimony he would leave his entire estate to the trust already established for Meredith. The decision to require insurance is discretionary. Grotsky v. Grotsky, 58 N.J. 354, 361 (1971) (noting that insurance requirements may be imposed "where the circumstances equitably call for such action"); N.J.S.A. 2A:34-23d. The judge's decision not to require insurance under these circumstances is a valid exercise of his discretion.
Similarly, the judge's treatment of child support is appropriate. Plaintiff complains that the treatment of her child care expense should not have included a tax-effect reduction because she does not claim a tax benefit. Nothing in this record suggests that a tax benefit would not be available were plaintiff to claim it and the implied requirement that she do so appears appropriate. Plaintiff argues that in computing her net income the judge did not "consider the agency fee of $3,500.00 which is incurred when a new nanny must be found." Nothing in the court's decision, of course, precludes plaintiff from seeking contribution should this expense be incurred in the future. We find no abuse of the judge's discretion in his treatment of the child support.
Plaintiff also complains that the court failed to consider the parties' premarital cohabitation. In fact, the judge did so, specifically considering it "minimal." We have no quarrel with the judge's characterization of the duration of the cohabitation.
Plaintiff complains of the treatment of the value of the van. The judge resolved this issue on the conflicting testimony of plaintiff and defendant. Plaintiff sought to reduce the blue book value of the van by virtue of damage it had sustained, but produced no evidence of the extent of that damage or the valuation. The court noted during testimony that "there's been no appraisal done on the property damage" and found the value of the van to be as defendant testified. That finding is entitled to deference, see Dolson v. Anastasia, 55 N.J. 2, 7 (1969) (trial judge's findings are particularly entitled to deference when they deal with issues of credibility, witness demeanor, and the "feel of the case"), and we have no basis on which to disturb it. In short, plaintiff cannot complain that the judge accepted defendant's testimony rather than her own.
Finally, plaintiff complains of the judge's requirement that she bear half of the cost of the joint expert and half of her counsel fees. The award of fees and costs is discretionary, Chestone v. Chestone, 285 N.J. Super. 453, 468 (App. Div. 1995) (citing Williams v. Williams, 59 N.J. 229, 233 (1971)), and will not be disturbed absent an abuse of that discretion. Ibid. (citing Fidelity Union Trust Co. v. Berenblum, 91 N.J. Super. 551, 561 (App. Div.), certif. denied, 48 N.J. 138 (1966).
The judge appropriately considered the factors governing the award of fees. See Williams, supra, 59 N.J. at 233; R. 5:3-5(c); N.J.S.A. 2A:34-23. He implicitly rejected plaintiff's claim that the expert was required to spend a disproportionate amount of time as the result of defendant's failure to disclose documents required by the joint expert. That claim was not supported by the record. The judge did consider plaintiff's claim that her fees were increased by unreasonable positions taken by defendant. The judge's ultimate award after having considered the appropriate factors is not so disproportionate as to require our intervention.
In short, we remand for further consideration of plaintiff's claims to a right of distribution from the proceeds of the marital home and for a greater distribution from the Fidelity account. We affirm the balance of the judgment of April 13, 2005, and the entirety of the July 11, 2005, order denying reconsideration.
Affirmed in part; reversed and remanded in part.