November 8, 2007
MARIE A. GONZALES, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
EMELITO T. GONZALES, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, FM-02-01738-93.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 10, 2007
Before Judges Stern, A. A. Rodríguez and C. S. Fisher.
Emelito Gonzales (father) appeals from two post-divorce judgment orders entered on October 7, 2005, that: (1) converted his limited duration (nine years) alimony obligation to Marie A. Gonzales (mother) into permanent alimony; (2) denied his cross-motion to compel the mother to contribute to the college education of the children; and (3) awarded counsel fees to the mother. On the other hand, the mother cross-appeals from the portion of the same orders that denied her request that the father be compelled to obtain life insurance to secure the alimony obligation. She also challenges the amount of permanent alimony awarded. We affirm on the appeal and cross-appeal.
The parties were divorced on September 21, 1995, after a fifteen-year marriage. They had four children, now ages twenty-eight, twenty-six, twenty-five and twenty-two. A property settlement agreement (PSA) was incorporated into the judgment of divorce. Pursuant to the PSA, the father was to pay $60,000 per year in alimony for the first three years; $50,000 the next three years; and $40,000 for the final three years. Alimony was to end on September 21, 2004. According to the PSA, thereafter "the [mother] expressly waives and relinquishes present and future claims against the [father] for alimony, and the [father's] obligation to pay alimony . . . shall cease." There was no indication in the PSA or on the record at the time of the divorce whether the alimony was intended to be "rehabilitative alimony" or "limited duration alimony."
The oldest child, Christopher, lived with the father at the time that the PSA was signed. Child support was set at $40,000 per year for the three children, Joseph, Jennifer and Kim, then living with the mother (allocated at $13,333.33 per child). The parties acknowledged that Joseph has "special needs and as such his future emancipation is uncertain." Joseph has Down's Syndrome, an IQ of 40, speech and language disorders, and a hearing impairment. He can not be left at home unsupervised because he does not recognize danger and has a problem gorging on food. The father agreed to let the mother and the three younger children occupy the marital residence for another four years, at which time, the property would be equitably distributed.
The father is a radiation oncologist physician, who was employed by St. Elizabeth's Hospital from 1980 until 1986. In 1987, the father went to a "fee for service" practice and no longer received a salary from the hospital. In 1995, the year the PSA was executed, he reported $272,262 in annual business income. The father is currently an employee of Catskill Radiation Onccology Consultants. At the time of the hearing on this motion, the father was grossing about $250,000 a year from his job. His mother died during the plenary hearing. He testified that he expected to inherit about $700,000 from her.
The mother earned a degree in radiation therapy in 1975 and worked as a radiation therapy technician at St. Vincent's Hospital, earning between $13,000 to $15,000 per year, until her first child was born in 1979. She attended Manhattan College from 1979 through 1980, but did not complete the program due to her pregnancy with Joseph. She did not return to work for the remainder of the marriage. This was by agreement of both parties. She spent her time volunteering and advocating on behalf of Joseph and taking care of the rest of the family.
After the parties separated, the mother worked as a radiation therapist technician on a per diem basis for three weeks and earned $2,056. In 1992, she obtained a degree in massage therapy. Thereafter, she attended the Tri-State Institute from September 1992 through June 1995 and earned a Diploma in Acupuncture. In April 1996, she started a private acupuncture practice. In 1997, she reported a business income of $5,855. In 2001, she reported a net business income of $13,181, plus other earned income of $3,870.
The Prior Alimony Application
In 2001, the mother applied to convert the spousal support to permanent alimony. Following a hearing, Judge Patrick Roma denied the application. We affirmed on appeal, but noted:
We note parenthetically Judge Roma's observation that neither party is precluded from a modification application in the future. While expressing no cavil with the trial court's disposition of the current issues based on the record developed, we urge the trial court on any further application to consider whether, given all pertinent factors, including the parties' experiences under the regime ordered herein, this matter should be regarded as an appropriate situation for an award of permanent alimony.
[Gonzales v. Gonzales, No. A-1390-01T2 (App. Div. July 10, 2003).]
In September 2002, the mother began working part-time at Dunroven Nursing Home at $11.50 per hour, plus medical benefits. That year, the Dunroven income was $1,500 and her acupuncture business net income was $3,099. The following year, she had a net business income of $18,313, plus income from Dunroven of $3,696, for a total of $22,009.
Beginning in September 2002, the father and his second wife, who had experience caring for people with Down's Syndrome, assumed equal physical custody and care of Joseph.
The Present Application
In 2004, the mother filed the present application to convert the spousal support to permanent alimony; to secure the permanent alimony obligation with a life insurance policy; and for counsel fees. The father cross-moved to compel the mother to contribute her share of the children's college costs and medical expenses.
Following a plenary hearing, Judge William R. DeLorenzo issued a written opinion on October 7, 2005. Thereafter, the father filed an appeal and Judge DeLorenzo issued a second written opinion, dated December 13, 2005, analyzing the counsel fee issue and ordering the father to pay $33,500 in counsel fees.
The judge considered the following proofs. In April 2004, the mother purchased commercial property in Nyack, New York for $229,000. She financed the purchase by taking a $150,000 mortgage on her home and putting another $150,000 mortgage on the Nyack property. That year, she earned $20,400 net business revenue from her acupuncture practice; $3,450 from her job as an independent contractor at an acupuncture clinic; $13,775 from Dunroven; and $1,784 in rental income. Thus, her total income that year totaled $39,409.
Gary Sherman, a certified public accountant, reviewed each party's tax returns and prepared cash flow summaries for 2000-2003. These summaries showed cash flow after payment of taxes, and for the father, after payment of alimony and child support.
The proofs showed that when Joseph turned twenty-one, he was no longer entitled to services. The mother testified that Joseph's needs impede her ability to maximize her gainful employment. According to the mother, she took the Dunroven job because Joseph was allowed to go with her. He delivered papers and mail and helped move residents. The mother also arranged jobs for Joseph at Friendly's and Hennessey's Restaurant. The father has been willing to assume fifty-percent responsibility for their son's care to allow the mother more time to work.
Judge DeLorenzo found that the father and his spouses' increased role in Joseph's care "clearly benefited Joseph," but it had not "allowed the [mother] to secure her economic independence." The judge found that the PSA provided for alimony "without the benefit of any plan of rehabilitation being established in the record." With regard to the wife's work efforts, the judge found that she had made a good faith effort to maximize her earning capacity, working fifty hours per week at two jobs. However, her work career had been interrupted during the "foundational years," making her less marketable.
Therefore, the judge concluded that it was "appropriate to convert the present alimony to permanent alimony." This appeal follows.
On appeal, the father contends that the judge erred by:
(1) converting the spousal support obligation to permanent alimony; (2) requiring him to pay for all of the children's college expenses without contribution from the mother; and (3) ordering him to make a contribution to the mother's counsel fees. We are not persuaded by these arguments.
Modification to Permanent Alimony
The award of alimony to a divorcing spouse is set by N.J.S.A. 2A:34-23. The goal of alimony is "to assist the supported spouse in achieving a lifestyle that is reasonabl[e] comparable to the one enjoyed while living with the supporting spouse during the marriage." Crews v. Crews, 164 N.J. 11, 16 (2000). "The supporting spouse's obligation is set at a level that will maintain that standard." Innes v. Innes, 117 N.J. 496, 503 (1990) (citing Lepis v. Lepis, 83 N.J. 139, 150 (1980)).
At the time of the parties' divorce in 1995, N.J.S.A. 2A:34-23 provided that a court could award permanent or rehabilitative alimony. L. 1988, c. 153, § 3. The rationale for permanent alimony is to recognize the "'transfer of earning power' [that] occurs during a traditional marriage in which the homemaker spouse's efforts increased the other's earning capacity at the expense of [the homemaker]." Cox v. Cox, 335 N.J. Super. 465, 483 (App. Div. 2000).
Rehabilitative alimony was recognized by statute in 1988.
L. 1988, c. 153, § 3. Rehabilitative alimony is a short-term award to enable the supported spouse "to complete the preparation necessary for economic self-sufficiency," Hill v. Hill, 91 N.J. 506, 509 (1982), and "ceas[es] when the dependent spouse is in a position of self-support." Hughes v. Hughes, 311 N.J. Super. 15, 31 (App. Div. 1998) (citing Weber v. Weber, 268 N.J. Super. 64, 71 (App. Div. 1993)). Rehabilitative alimony is an appropriate award when, for example, "a spouse who gave up or postponed [his or] her own education to support the household requires a lump sum or a short-term award to achieve economic self-sufficiency." Mahoney v. Mahoney, 91 N.J. 488, 504 (1982). "The focus of rehabilitative alimony is upon the ability of a dependent spouse to engage in gainful employment, combined with the length of the marriage, the age of the parties, and the spouse's ability to regain a place in the workplace." Cox v. Cox, supra, 335 N.J. Super. at 475 (citations omitted). Rehabilitative alimony is not an exclusive remedy, and "[r]ehabilitative alimony in addition to permanent alimony is favored, where appropriate." Hughes, supra, 311 N.J. Super. at 32.
At the time of the parties' divorce, limited duration alimony was not a recognized form of spousal support that could be judicially enforced pursuant to N.J.S.A. 2A:34-23. However, the parties could agree to limited duration alimony between themselves. Gordon v. Rozenwald, 380 N.J. Super. 55, 65 (App. Div. 2005). Limited duration alimony was added to the statutory construct in 1999, and authorized the court to award alimony for "the length of time it would reasonably take for the recipient to improve his or her earning capacity to a level where limited duration alimony is no longer appropriate." N.J.S.A. 2A:34-23c. "Limited duration alimony is available to a dependent spouse who made contributions to a relatively short-term marriage that . . . demonstrated the attributes of a marital partnership and has the skills and education necessary to return to the workforce." Gordon v. Rozenwald, supra, 380 N.J. Super. at 65 (quoting CoX v. Cox, supra, 335 N.J. Super. at 483) (internal quotations omitted).
Here, the parties entered into a PSA settling their differences. New Jersey has a policy of favoring the use of consensual agreements to resolve marital controversies, and such agreements are accorded "prominence and weight." Konzelman v. Konzelman, 158 N.J. 185, 193 (1999). "'[F]air and definitive arrangements arrived at by mutual consent should not be unnecessarily or lightly disturbed.'" Id. at 193-94 (quoting Smith v. Smith, 72 N.J. 350, 358 (1977)). However, "divorce agreements are necessarily infused with equitable considerations and are construed in light of salient legal and policy concerns." Konzelman, supra, 158 N.J. at 194 (citing Petersen v. Petersen, 85 N.J. 638, 642 (1981)). They are enforceable if found to be fair and just. Ibid. For that reason, "[incorporation] of a [PSA] into a divorce decree does not render it immutable." Ibid. "Courts have continuing power to oversee [such] agreements, and . . . to modify [a PSA] on a showing of 'changed circumstances.'" Ibid. (citation omitted). "The equitable authority of a court to modify support obligations in response to changed circumstances, regardless of their source, cannot be restricted." Lepis v. Lepis, 83 N.J. 139, 149 (1983).
In addition to a showing of changed circumstances, rehabilitative alimony and limited duration alimony "may be modified based . . . upon . . . the nonoccurrence of circumstances that the court found would occur at the time of the . . . award." N.J.S.A. 2A:34-23c & d. However, N.J.S.A. 2A:34-23c, regarding limited duration alimony, also states that "[t]he court may modify the amount of such an award, but shall not modify the length of the term except in unusual circumstances."
In Gordon v. Rozenwald, supra, 380 N.J. Super. at 69, we announced standards regarding the modification of the length or term of limited duration alimony.
Because the statutory standard for modification of limited duration alimony is the equivalent of the standard utilized in prior judicial decisions addressing analogous arrangements, trial courts applying the "unusual circumstances" standard in N.J.S.A. 2A:34-23c should consider decisions addressing modification of such specific provisions under the "not ordinarily fair and equitable" standard of prior decisional law. [Ibid.]
In addressing negotiated agreements, we noted that "courts may and should presume that preservation of an arrangement to terminate alimony will not conflict with the prohibition against substitution of limited duration for permanent alimony and apply the 'unusual circumstances' standard." Id. at 70. The presumption is based on the principle that the parties to the dispute are in the best position to determine the best solution to their unique situation. Ibid. However,
In order to prevent preservation despite the non-performance or nonoccurrence of a condition intended to provide permanent support, which would undermine the statutory scheme, we hold that a party may overcome the presumption and avoid application of N.J.S.A. 2A:34-23c by demonstrating, as part of a prima facie case, that the term is a substitute for permanent alimony premised upon a promise or expectation of alternative funds for support that has not been fulfilled or realized. [Ibid.]
Here, the mother argues that the judge correctly determined that this was rehabilitative alimony "not subject to the heightened 'unusual circumstances' standard called for under N.J.S.A. 2A:34-23(c) upon an application for modification." However, we note that the judge did not make a finding that the PSA called for rehabilitative alimony. He put no label on the original alimony agreement. Rather, he stated that this was not "a true" limited duration alimony situation. Therefore, he did not need to address the "unusual circumstances" test. He correctly stated that in a true limited duration alimony situation, alimony would not be appropriate where permanent alimony would otherwise be awarded. He then found that "[i]n this matter it would appear that the term was fixed based upon an assessment as to when the [mother] could reach economic independence. The fact is she has not and is in need of additional support which the [father] can provide." The judge then looked at the factors set by N.J.S.A. 2A:34-23b, and made detailed findings as to their existence or non-existence in this case based on the proofs presented. He determined that permanent alimony was appropriate. The judge wrote in his October 7, 2005, opinion:
The [father] had the most accurate assessment of the situation when he expressed concern as to whether the [mother] could reach economic independence since she was the primary caregiver for Joseph.
Despite the efforts of the [mother] and the financial support of the [father], the [mother] cannot reach economic independence.
The [father] knew when the [Judgment of Divorce] was granted or perhaps when the Court reached its 2001 decision, the true state of affairs.
After a careful review of the record, we conclude that, given the equities of the case, i.e., the fifteen-year marriage, the mother's length of time out of the workplace, her support of the father's career, her lack of income, the father's substantial income, and most importantly, her income limitations imposed by her responsibilities for Joseph, permanent alimony is appropriate at this time. See Cerminara v. Cerminara, 286 N.J. Super. 448, 461-62 (App. Div.) (affirming the trial court's finding that the forty-two-year-old wife was entitled to permanent alimony after a twelve-year marriage because she had not worked consistently), certif. denied, 144 N.J. 376 (1996). However, we caution that the label "permanent" is not accurate. As the judge wrote in his October 7, 2005, decision, "[l]ike any permanent alimony situation, however, indeterminate alimony may be more descriptive than permanent since permanent alimony is subject to amendment based on the requisite change of circumstances." Here, there are a number of circumstances that may change and warrant modification. The mother may achieve economic independence after all. Joseph's condition may improve and he may need less physical and emotional support from his mother, or his condition may worsen, requiring more time and resources from his mother. In the event of a substantial change in future circumstances, the father or mother is entitled to bring a Lepis application.
The Amount of Permanent Alimony
We also conclude that the amount of permanent alimony is appropriate. In setting the award of permanent alimony, the judge looked at the mother's 2004 case information statement (CIS), which showed total expenses of $9,704.78 per month. The judge reduced those expenses by $2,230.78 for a total monthly expenditure of $7,474, or about $90,000 per year.
The judge set forth the mother's gross business receipts, business expenses, and net business income for 2000-2004, but noted that the cash flow summary presented by the expert underestimated the cash available to the mother by including depreciation, which is not an actual cash outlay. The judge noted the mother's acquisition of the Nyack property, which generated a gross income of $2,700 a month, or $32,400 per year. The judge found that the mother had an earned income of $82,992 in 2004, and that she received $13,333 per year in child support for Joseph and an identical amount for Kimberly, which would expire in May 2006.
The judge determined that the mother's "standard of living/needs" was $150,000 a year. He subtracted $26,600 for child support for two children and $83,000 for the mother's earned income for a total of $40,400. He then subtracted $13,333 in child support for Kim, for a "shortfall" of $26,067.*fn1
He ordered the father to pay the mother $30,000 a year in alimony. The judge stated that by setting alimony at that rate, he took into account that the father paid for the college education of his children without contribution from the mother.
Our review of the amount of an alimony award is limited. Gordon v. Rozenwald, supra, 380 N.J. Super. at 76. "A trial court's rulings in such matters are discretionary and not overturned unless the court abused its discretion, failed to consider controlling legal principles or made findings inconsistent with or unsupported by competent evidence." Ibid. We find no abuse of discretion. Rather, we note that the judge conducted a thorough and thoughtful analysis of the facts and applied these to the governing factors. His conclusion is sound and correct.
The father contends that the judge erred in requiring him to pay for the children's college expenses without any contribution from the mother. We disagree.
The PSA provides that:
[t]he parties shall, based upon their individual ability and means, pay the reasonable costs of a four-year undergraduate college education . . . for each of the unemancipated children of the marriage.
Despite this provision, the father paid for all of the college expenses incurred for the three children that went to college. In 2001, the father moved the court for contribution from the mother for Christopher, the oldest son's college expenses. Judge Roma denied that request, finding that "by his conduct and course of dealing [the father] had waived the referenced provision of the PSA." The judge noted that payment of college expenses for the other children was not before him at that plenary hearing, but that there was a document signed by both parties stating that the oldest daughter's custodial accounts would be used to pay for her college tuition and that the father would pay any difference. The judge also noted the evidence that a custodial account had been set up for each child by his mother to pay for their college education.
In response to the present application, the father cross-moved for the mother to contribute "a portion of our children's college costs of past, present and future." At the plenary hearing, he testified that Kimberly went to Lehigh and he paid about $32,000 a year for her education. He also testified that his mother had given him money to help pay for his children's college educations, but he did not go into any further detail.
Judge DeLorenzo addressed the mother's motion only by saying:
In reducing the alimony to $30,000 per annum, the Court has taken into account that the [father] has paid for the college education of his children without contribution from the [mother]. The Court has also found that the [mother] has maximized her earnings and still cannot meet the standard of living she enjoyed during the marriage.
First, we note that application as to Christopher was already ruled upon by Judge Roma. Second, the issue of the "custodial accounts" was never addressed. The record does not show how much was in Jennifer or Kimberly's account. Third, the father failed to show any financial need for help in paying for Kimberly's education. In addition to whatever sums the paternal grandmother had already paid, he was expected to inherit $700,000 from her estate. That was in addition to his $250,000 salary. The mother, on the other hand, was still struggling to meet the parties' marital standard of living. The budget used by the judge to calculate her need did not include her contributing towards college costs.
Because of the father's far superior financial position and the fact that he benefited from the generosity of his mother, we find no error in denying contribution from the mother towards college costs.
The father contends that the judge erred in ordering him to pay $33,500 of the mother's counsel fees. We disagree. Counsel fees are a matter of discretion for the judge. R. 5:3-5(c). In determining the amount of the fee award, the judge considered 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. [Ibid.]
The judge ordered the father to pay sixty-percent of the mother's fees, or $33,500. We find no abuse of discretion. The overriding factor here is the father's far superior financial position. Moreover, the mother is still left with forty-percent of her fees.
The mother cross-appeals contending that the judge erred in fixing the amount of permanent alimony and by not requiring the father to obtain life insurance for her benefit. We have already addressed the amount of spousal support and conclude that the judge's findings are supported by the proofs. R. 2:11-3(e)(1)(A); Cesare v. Cesare, 154 N.J. 394, 411-12 (1998).
With respect to the mother's request that the father be required to maintain life insurance for her benefit, we note that pursuant to N.J.S.A. 2A:34-25, alimony terminates upon the death of the payer spouse. However, "[n]othing in this act shall be construed to prohibit a court from ordering either spouse . . . to maintain life insurance for the protection of the former spouse . . . or the children of the marriage . . . in the event of the payer spouse's . . . death." Ibid.
Pursuant to the PSA, alimony was to terminate upon the father's death. There was no provision for insurance on his life. Therefore, the parties did not bargain for this provision. It is inequitable to order him to obtain it now, at age sixty. Moreover, we note that the father has life insurance for the benefit of Joseph and, as a result, his needs will be provided for.
The mother's reliance on Claffey v. Claffey, 360 N.J. Super. 240 (App. Div. 2003), is misplaced. That case presented unusual factual circumstances. In Claffey, the husband was entitled to pension benefits. Id. at 246. The wife was awarded a portion of those benefits as part of the equitable distribution of the parties' assets. Ibid. Obviously, the husband was not entitled to the benefits until he retired, and there were no other assets to pay the wife her share of the pension. Id. at 258. Therefore, she had to wait until he retired to collect her equitable distribution. Ibid. However, if the husband died the day after he retired, the wife would not be entitled to any further benefits, and she would not receive her equitable share of the pension. Id. at 262. Compounding the problem was that the wife was financially dependent upon the husband and received permanent alimony. Ibid. Alimony would end upon the husband's death. Ibid. All of this meant that when the husband died, the wife would no longer have alimony and would have no entitlement to the pension funds, leaving her with no means of support. Id. at 263. Therefore, the court found that a life insurance requirement upon the husband equal to the amount of the wife's interest in his pension was necessary in order to protect her from his untimely death. Ibid. The situation here is different. The mother received significant equitable distribution assets and did not have to delay her receipt of them.
In sum, the orders challenged on the appeal and cross-appeal are affirmed substantially for the reasons expressed by Judge DeLorenzo in his October 7, 2005, and November 21, 2005, written decisions. From our thorough review of the record, we are satisfied that the findings he made regarding disputed facts are supported by the evidence presented, given his special expertise as a Family Part judge. R. 2:11-3(e)(1)(A); Cesare, supra, 154 N.J. at 412-13. However, we do note an unintended mathematical error in the calculation of the amount of alimony awarded, see footnote 1 above, and we remand for a correction of this error and a concomitant recalculation.
Affirmed and remanded to the Chancery Division, Family Part, Bergen County, for the entry of an amended order.