On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, FM-13-0861-00-B.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 22, 2007
Before Judges Parrillo and Sabatino.
Defendant, Edward J. Levine (the "ex-husband") appeals an order of the Family Part dated January 22, 2007. The order denied the ex-husband's application to modify spousal and child support payable to his former spouse, plaintiff Mary K. Hawley ("the ex-wife"). We remand for a plenary hearing, particularly as to the continued reasonableness of imputing to the ex- husband, as determined at the 2001 divorce trial, $170,000 in annual earnings capacity.
The parties were divorced on August 10, 2001 after a four-day trial. The ex-wife was awarded primary residential custody of the parties' two children, one of whom is now age twenty-one and the other who is now eighteen. The ex-wife and the children continue to reside in New Jersey. The ex-husband relocated to Staten Island, New York, and has remarried.
The ex-husband is a physician who has been licensed in the State of New York since 1986. A major issue at trial, one which continues to divide the parties, concerns his earnings capacity. Prior to 1998, the ex-husband was earning about $200,000 per year through his practice with Heartland Medical Services. However, his income potential became hampered after March 1998, when he was arrested and charged with participation in an illegal scheme to sell prescription drug samples to a drug company representative. He pled guilty in September 1999, was fined $20,000, and was sentenced to five years probation and six months house arrest. The New York Medical Review Board then revoked his privilege to bill Medicare or Medicaid for ten years. The ex-husband subsequently was discharged by Heartland in June 2000. After that, he opened his own medical clinic in Staten Island and also started a laser hair removal business.
His then-girlfriend, now his present wife, worked at the clinic without pay.
At the time of trial in 2001, the ex-husband was working full time in his new medical practice. The practice had been operating at a loss, but was expected to grow despite its inability to bill Medicare and Medicare for patient reimbursements. The laser hair business, meanwhile, was only generating about twelve patients per month.
After considering the proofs and financial projections as they existed at the time, the trial judge imputed $170,000 in annual earnings to the ex-husband. Based on that imputed income, the trial judge set alimony in the Final Judgment of Divorce ("FJD") at $2600 per month and child support at $1735 per month. The judge phased in those support obligations gradually through July 2002, in recognition that it would likely take some time for the ex-husband to develop his new practice. The FJD also provided for equitable distribution of the marital assets, the ex-husband's parenting time with the children, attorneys fees and other matters not germane to the present appeal. The ex-husband appealed the FJD's awards of alimony, child support and counsel fees, all of which we sustained in a per curiam opinion. Levine v. Levine, No. A-0483-01T2 (App. Div. Jan. 8, 2003).
In the six years since the FJD was entered on July 2, 2001, the ex-husband has unsuccessfully attempted several times to have his support obligations reduced by the Family Part, based upon alleged changes in circumstances. Meanwhile, his combined support obligation has risen, as the result of cost of living adjustments in the child support, to $4559 per month, or over $54,000 per year. The ex-husband has repeatedly failed to pay the monthly sums due, typically paying his ex-wife and children only $800 monthly. Consequently, his support arrears mounted to over $127,000 as of January 2007.
The ex-husband's chronic non-payment and under-payment of support, as well as his non-compliance with certain other court directives, prompted the ex-wife to file several motions for enforcement. One of those applications resulted in the issuance of a bench warrant for the ex-husband's arrest in November 2006, which was vacated when he supplied the ex-wife with copies of certain requested financial records.
According to tax returns and other financial documents produced by the ex-husband, since 2001 he has earned nowhere near the $170,000 projected for him in the FJD. Instead, his records reflect that he earned about $120,000 in 2002 and $138,000 in 2003, although the ex-husband contended that those figures represent his business's gross receipts, and that his net income for those years was much lower. The records further show that he earned $48,500 in 2005 and only $41,346 in 2006. The ex-husband contends that his earnings have been seriously curtailed by the restrictions imposed on his medical license by New York authorities, forcing him to rely upon patient copays and direct billings. The ex-wife, meanwhile, contends that the ex-husband has the ability to earn higher sums, notwithstanding his practice restrictions. She suspects that he is understating his true earnings. She notes that much of his current practice is derived from cash payments, that he pays a $650 weekly salary to his present wife, and that at one point he drove a late-model Mercedes convertible when picking up the children at her home. The husband countered that the Mercedes was leased not by him, but by his present wife, and that she performs gainful services in the practice.
The January 22, 2007 order before us resulted from a motion filed by the ex-husband in December 2006, not long after the November 2006 bench warrant had been vacated. His motion sought (1) a finding of changed circumstances and that the original obligation amount was no longer "fair and equitable"; (2) a finding that the ex-wife had orally agreed to a reduction in alimony; (3) a recalculation of child support based on the passage of more than three years since the original support order; (4) the appointment of a forensic accountant, at the exhusband's expense, to review the ex-husband's medical practice and income; (5) an ...