November 19, 2007
LORI L. BONNETT, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
JOSEPH L. KRIVULKA, DEFENDANT-APPELLANT/ CROSS-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Warren County, Docket No. FM-21-226-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 30, 2007
Before Judges Fuentes and Grall.
Defendant Joseph L. Krivulka appeals from the order of the Family Part imposing $15,000 as a monetary sanction for his failure to pay child support and childcare expenses as provided in the parties' property settlement agreement (PSA). Invoking its alleged authority under Rule 4:42-9, the court directed defendant to pay this monetary sanction directly to plaintiff's attorneys.
Defendant argues that the trial court abused its discretion in transforming a monetary sanction into an award of attorneys' fees, and that the amount of the sanction was sufficiently punitive to require a hearing under R. 1:10-2. Plaintiff cross- appeals arguing that the proper amount of the sanction should have been $31,500.
After reviewing the record before us, and in light of prevailing legal standards, we vacate the order imposing the sanction, and remand the matter for a plenary hearing. These are the salient facts.
The parties are former husband and wife. They had two children who are now eight and five years old. The PSA executed by both sides on June 1, 2006, obligates defendant to pay child support in the amount of $4,000 per month; payment is due "within the first five days of that month." Defendant is also responsible to pay daycare expenses "up to a maximum of $1,000/month" until the oldest child reaches the age of twelve. Thereafter, the maximum daycare expense is reduced to $500 per month until the youngest child reaches the age of twelve.
Plaintiff is required to provide defendant documentation in the form of "daycare expenses for the prior month by the 5th day of the next month." Defendant must reimburse plaintiff "within 7 days thereafter."
On July 11, 2006, just one month and eleven days after the execution of the PSA, plaintiff moved before the Family Part seeking enforcement of defendant's child support obligation.*fn1
Plaintiff alleged that defendant was in arrears with respect to the month of July. Although the record does not contain defendant's response to this motion, we can infer the substance of defendant's opposition from the motion judge's statement of reasons in support of his decision.
On August 4, 2006, the court granted plaintiff's motion, finding that defendant was "in violation of litigant's rights for failing to comply with the terms of the [PSA]." The court then ordered the following relief:
The defendant shall pay the July child support by August 11, 2006 or he will be sanctioned $500.00 per day until he complies.
The defendant shall make all future payments timely or be sanctioned $500.00 per day that he is late with any payment (including child support, daycare expenses, lump sum equitable distribution, or any other financial obligation).
The defendant shall pay the mother's attorney, the law firm of Dughi & Hewit, the sum of $1,560.00 in counsel fees for the costs of this application within fourteen (14) days of the date of this order. If the father fails to comply, he shall be sanctioned $500.00 per day until he complies.
The motion judge gave the following statement of reasons in support of his ruling.
The father paid the June child support one month late and has yet to pay the July support, $4,000.00, due July 1, 2006. The court notes that the father has represented that he is currently in compliance with the order. However, Probation indicates that as of August 4, 2006, the father has paid support for neither July or August. Additionally, at the same time the motion was filed, the father had not yet paid $17,500.00 pursuant to the Property Settlement Agreement. The father has a history of non-compliance. Therefore, it is appropriate for the court to specify the sanctions should the father choose to continually ignore his obligations. If the father continues to not comply with this court's orders, he may be incarcerated.
As the emphasized section of this passage indicates, the court acknowledged a discrepancy between defendant's allegations of compliance and the records kept by the Probation Department. Instead of ordering a plenary hearing, the court decided to resolve this factual conflict based only on the parties' "warring" certifications.
Less than a month later, plaintiff filed another enforcement motion against defendant. This time, plaintiff requested that the court sanction defendant in the amount of $31,500, payable to her attorneys. In her supporting certification, plaintiff elaborated on how she arrived at the $31,500.00 figure:
$500.00 a day sanction for 30 days for non-payment of August child support - $15,000.00 (August child support due August 5, 2006).
$500.00 a day sanction for 18 days for non-payment of legal fee - $9,000.00 (due August 18, 2006).
$500.00 a day sanction for 15 days for non-payment of child care/camp expenses -$7,500.00 (due August 21, 2006).
In his opposing certification defendant once again alleged that the arrears were the result of a clerical error at the Probation Department. The error arose when the parties' June 1, 2006, PSA altered the monthly amount of child support due.
Specifically, defendant certified that:
Prior to our divorce, my child support obligation was $4,983 per month. Because of the date on which the initial order was effective, the Probation Department carried that figure for the period commencing the 15th of the month through the 15th of the following month. I issued a check to the Probation Department for the period May 15- June 15 in the amount of $4,983, my check number 442, which brought my support current for that period. It was negotiated by the Probation Department on May 16, 2006. We settled our case with child support adjusting effective June 1, 2006, as per the Order annexed as Exhibit A. Consequently, my May 16, 2006 payment, which was to cover the period through June 15, 2006, represented a small overpayment, as the amount reduced by $983 per month under our settlement.
My next payment to the Probation Department was on July 1, 2006, in the amount of $4,000, which the check being negotiated on July 6, 2006 [sic]. I then paid the Probation Department $4,000 on August 1, 2006, with that check being negotiated on August 9, 2006. A similar scenario applies for September, although I do not yet have the canceled check. I believed that I was current with my payments, but had missed the June 16-30 period; the Probation Department, however, has been reflecting my having arrears at a level of two months or more.
The net of this is that I was short the sum of $1,508.50, representing the period June 16-June 30, 2006. This was inadvertent on my part; I had lost track of the fact that the prior Order covered periods running from 15 of one month through the 15 of the other, and thought that when I made the July 1 payment, I was then current. Of course, I do not know if the Probation Department has in fact made the requisite payments to plaintiff and she is simply taking advantage of their clerical error, or has its own internal problems and has neglected to make the payments to plaintiff. What I do know is that I have canceled checks reflecting the payments set forth in this paragraph, and with the $1,508 I paid last week, I am current.
Defendant further certified that the only documentation he received from plaintiff regarding the childcare, camp expenses, and the children's private school were copies of checks made out to "cash."
Despite the factual conflicts presented by these certifications, the motion judge once again decided the motion without the benefit of an evidentiary hearing. The court then made the following findings.
The father is hereby held in violation of litigant's rights for his failure to abide by the parties' Property Settlement Agreement and the court's August 4, 2006 Order.
The father shall pay September and October child support in the amount of $8,000.00 to the probation department no later than October 9, 2006. The father shall be sanctioned $500.00 per day for each day he does not comply.
The father shall reimburse the plaintiff for daycare and camp expenses in the amount of $2,544.00 no later than October 9, 2006. The father shall be sanctioned $500.00 per day for each day he does not comply.
The father is hereby sanctioned in the amount of $15,000 for nonpayment in accordance with this court's Order of August 4, 2006. These funds shall be used to pay the law firm of Dughi & Hewit, P.C. for the mother's accrued legal fees.
The mother shall continuously submit and maintain receipts and/or documentation relating to daycare, camp and tuition expenses from the date of this order.
Despite these findings, the motion judge implicitly accepted defendant's allegations concerning plaintiff's failure to maintain and provide accurate and reliable records of childcare expenses. The court ordered that "from this point forward the mother shall keep accurate receipts for expenses required to be paid by the father in order to prevent disputes."
Finally, after articulating these findings, the court identified what it considered to be the source of its authority to impose the sanctions outlined.
R. 4:42-9(a)(1) allows a trial court, in its discretion, to make an award of counsel fees in a family action. One purpose of allowing for an award of counsel fees is to "prevent a maliciously motivated party from inflicting economic damage on an opposing party by forcing expenditures for counsel fees." Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992). When exercising its discretion, the court shall consider the following factors: (1) the financial ability of the party seeking the award to pay the counsel fees; (2) the financial ability of the party against whom the fees are sought to pay said fees; and (3) the good faith or bad faith of the parties. Williams v. Williams, 59 N.J. 229 (1971) as modified by N.J.S.A. 2a:34-23 [sic] (the court shall consider the good faith or bad faith of either party); Kothari v. Kothari, 255 N.J. Super. 500, 513 (App. Div. 1992).
The court finds that the sanctions to be awarded to the mother are a sufficient remedy for the bad faith of the father.
We review a trial court's imposition of either attorneys' fees or sanctions under the "abuse of discretion" standard. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443-44 (2001) (attorneys' fees); Gonzalez v. Safe & Sound Sec. Corp., 368 N.J. Super. 203, 209 (App. Div. 2004) (sanctions), rev'd on other grounds, 185 N.J. 100 (2005). Here, defendant argues that R. 4:42-9 provides a specific methodology for determining whether to grant counsel fees and does not permit the imposition of fees as a sanction or penalty. Thus, the trial court did not have the authority to impose a punitive $15,000 fee award under R. 4:42-9. We agree.
A judicial award of counsel fees in favor of one party is the antithesis of the "American Rule," in which each party pays for his or her own attorney. Auto Lenders Acceptance Corp. v Gentilini Ford, Inc., 181 N.J. 245, 280-81 (2004). Rule 4:42- 9(a)(1) is thus in derogation of this well-established practice. Under R. 4:42-9(a)(1), a trial court may award counsel fees in a family action, either pendente lite or on final determination, if such award accords with the parameters of R. 5:3-5. Rule 4:42-9(b) further requires that the applicant for such fees file an affidavit of services detailing the reasonableness of the requested fees. The filing of the R. 4:42-9(b) affidavit of services is a prerequisite for a fee award under the Rule. Kingsdorf v. Kingsdorf, 351 N.J. Super. 144, 158 (App. Div. 2002). See also Glen v. June, 344 N.J. Super. 371, 381-82 (App. Div. 2001).
Rule 5:3-5(c) provides that:
[i]n determining the amount of the fee award, the court shall consider, in addition to the information required to be submitted pursuant to R. 4:42-9 [regarding the affidavit of services], the following factors: (1) 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.
Consideration of the R. 5:3-5(c) factors is mandatory. See Randazzo v. Randazzo, 184 N.J. 101, 112-13 (2005) (discussing the rule in the context of a family court's equitable power under N.J.S.A. 2A:34-23 and R. 5:3-5 to order the sale of marital property to fund the parties' litigation); Kingsdorf, supra, 351 N.J. Super. at 157-59. Once the R. 4:42-9 affidavits and R. 5:3-5 factors are considered, however, the trial court enjoys discretion in making an award of attorneys' fees. Eaton v. Grau, 368 N.J. Super. 215, 225 (App. Div. 2004).
There is nothing in this regulatory scheme, however, that authorizes a court to impose sanctions as either a means to compel compliance with judicial orders, or as punishment for contumacious conduct. There is also no authority to convert a sanction into an award of counsel fees.
Further, R. 4:42-9 requires the movant to submit an affidavit of services detailing the reasonableness of her requested fees. Here, plaintiff submitted such an affidavit only for the $1,230 for preparing the September 5, 2006, motion. The $49,973.21 in counsel fees was incurred by plaintiff in connection with this matrimonial action. They are not fees incurred in prosecuting a particular enforcement motion. As such, the "Billing Summary" submitted by plaintiff in support of her motion does not meet the standard reflected in R. 4:42-9. Kingsdorf, supra, 351 N.J. Super. at 158.
Defendant also argues that the motion judge erred because (1) the authority for the imposition of economic sanctions is only available in R. 1:10-1 to -3; and (2) the sanctions imposed here were punitive in nature and thus in violation the Rule's clear injunction. We agree.
Rule 1:10-3 provides that:
[n]otwithstanding 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.
Rule 5:3-7, cross-referenced in R. 1:10-3, provides that:
[o]n finding that a party has violated an alimony or child support order the court may, in addition to remedies provided by R. 1:10-3, grant any of the following remedies, either singly or in combination: (1) fixing the amount of arrearages and entering a judgment upon which interest accrues; (2) requiring payment of arrearages on a periodic basis; (3) suspension of an occupational license or driver's license consistent with law; (4) economic sanctions; (5) participation by the party in violation of the order in an approved community service program; (6) incarceration, with or without work release; (7) issuance of a warrant to be executed upon the further violation of the judgment or order; and (8) any other appropriate equitable remedy.
In Ridley v. Dennison, 298 N.J. Super. 373, 376 (App. Div. 1997), we discussed the distinction between an economic sanction intended to compel compliance, and one intended to punish. In Ridley, the plaintiff-father petitioned the Family Part to compel defendant-mother and the children to comply with an earlier visitation order. The plaintiff was in the United States Army, and was stationed in Germany at the relevant time. Id. at 375, 379. The trial court granted plaintiff's request, finding that the mother had purposefully interfered with the children's visitation; the court ordered the mother pay a $1,250 sanction and $5,249.34 to the plaintiff for counsel fees related to the enforcement proceeding. Id. at 380.
In reviewing the trial court's ruling, we noted the absence of evidence in the record that the mother had been purposefully interfering with the father's rights to visitation. Id. at 378. Thus, in reversing the imposition of sanctions against the mother, we emphasized that:
The nature of the proceeding was not one for contempt under R. 1:10-2. Rather, the application was for enforcement of the court's order for visitation made under R. 1:10-3. 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. See New Jersey Department of Health v. Roselle, 34 N.J. 331, 169 A.2d 153 (1961); Pierce v. Pierce, 122 N.J. Super. 359, 300 A.2d 568 (App. Div. 1973).
We do not dispute the view that a monetary sanction imposed pursuant to R. 1:10-3 is a proper tool to compel compliance with a court order. See Franklin Township v. Quakertown, 274 N.J. Super. 47, 55-56, 643 A.2d 34 (App. Div. 1994). We are convinced, however, from the tenor of the judge's ruling and order imposing the penalties and sanctions, which included the assessment of all counsel and therapy fees, that these sanctions constituted specific and overt punishment for what the judge concluded was defendant's improper conduct over the years in failing to facilitate the court's past visitation orders. The court's action in this regard was so overwhelmingly punitive as to be improper without the benefit of a proceeding under R. 1:10-2 and its safeguards. Therefore, even if there were a proper factual basis for the judge's conclusions of defendant's culpability, the procedure employed was insufficient to warrant the action which he took.
Regarding our conclusion that the imposition of fees against defendant was solely punitive, we note specifically that the judge did not purport to consider any of the factors set forth in N.J.S.A. 2A:34-23 and R. 4:42-9. The judge failed in any way to consider the respective financial circumstances of the parties, whether the award was reasonable and just or the extent to which the parties acted in good or bad faith in bringing the matter before the court. See N.J.S.A. 2A:34-23. Clearly, the assessment against defendant of 100% of plaintiff's counsel fees, the full cost of therapy and guardian fees, and the expense of separate communication abroad to the father each week by each of the three children appears draconian when imposed upon a parent providing a college education for two children without contribution to that expense from the father. Viewed objectively it constitutes unusual and severe punishment; not a proper and just coercive means of enforcing the court's visitation order.
[Id. at 381-82.]
Here, defendant advanced two particular explanations in his own defense: (1) probation department accounting error; and (2) plaintiff's failure to provide sufficient documentation for childcare expenses. In ruling in plaintiff's favor, the court seemed to acknowledge the validity of the second allegation.
There is nothing in the record that supports an unequivocal intent by defendant to deliberately frustrate the court's orders. Indeed, confronted by the parties' conflicting factual assertions, the court should have conducted a plenary hearing, where the credibility of the witnesses can be tested under the scrutiny of cross-examination. Summary dismissal of defendant's position was not warranted.
With respect to the amount of the sanction, $500 per each day of alleged delinquency of support obligations is closer to punishment than coercive compliance. Although, economically, defendant is far better off than plaintiff, this, in and of itself, does not authorize the imposition of facially punitive sanctions. A monetary sanction under R. 1:10-3 must have a rational nexus to compelling compliance, not endowing plaintiff with an unwarranted economic windfall.
We recognize that the sanction here is triggered only when defendant fails to comply. Despite this conditional language, the sanction is punitive because the amount of the sanction, coupled with the per diem multiplier effect, quickly eviscerates any compulsive effect. We thus remand this issue for the court to consider other options.
In revisiting this issue, if satisfied that defendant's explanations are without merit, the court may consider directing defendant to maintain a fund controlled by plaintiff, subject to her providing an accounting of her costs, in which two or three months of childcare expenses are deposited and kept at all times. Failure to maintain this account fully funded would trigger a doubling or even a tripling of the minimum balance previously required. This would protect plaintiff, while creating a clear insensitive for defendant to honor his support obligations. Of course, an appropriate award of counsel fees for bringing any enforcement action is always within the court's authority, and subject to its sound discretion.
In conclusion, the order of the Family Part imposing economic sanctions against defendant in the amount of $15,000 is vacated. The court shall conduct a plenary hearing to determine whether economic sanctions are warranted. Any sanctions imposed must be under the provisions of R. 1:10-3, and should be crafted not to punish, but to compel compliance with the orders of the court.
The order of the court dated August 4, 2006, awarding plaintiff counsel fees in the amount of $1,560 in connection with the prosecution of the motion to enforce the PSA is stayed pending the outcome of the plenary hearing. The trial court is free to reinstate this award of counsel fees, and consider any supplemental certification for additional fees, if, at the conclusion of the plenary hearing, the court rejects defendant's position.
The arguments raised by plaintiff in her cross-appeal are rejected.
Reversed and remanded. We do not retain jurisdiction.