November 27, 2007
TERRY J. HART, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
WENDY M. HART, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Morris County, Chancery Division, Family Part, FM-14-634-97.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 17, 2007
Before Judges Lisa, Lihotz and Simonelli.
Plaintiff, Terry J. Hart, appeals from the denial of his post-judgment motion to reduce his alimony obligation. He also appeals from the denial of his reconsideration motion and from orders requiring him to pay counsel fees with respect to two applications that were part of this round of post-judgment motions. Defendant, Wendy M. Hart, cross-appeals from orders denying her applications for counsel fees in connection with two other applications in these proceedings.
Plaintiff argues that he demonstrated a sufficient showing of changed circumstances to warrant a reduction in alimony or, at the least, to require a plenary hearing on the issue. He further argues that the judge erred by not granting the requests of both parties for oral argument on the various motions and in failing to make sufficient findings of fact to support the orders entered. Finally, plaintiff argues that the judge mistakenly exercised his discretion in awarding counsel fees to defendant on two of the applications. On her cross-appeal, defendant contends the judge mistakenly exercised his discretion in failing to award her counsel fees in connection with two other applications. We reject the arguments of both parties and affirm on the appeal and cross-appeal.
The parties married in 1975. Two children were born of the marriage, in 1977 and 1978, both of whom were emancipated by the time of the motions that are the subject of this appeal. The parties separated in 1996, and they divorced in 1999, when they were both fifty-two years old.
Plaintiff holds an engineering degree from Lehigh University, and masters degrees from MIT and Rutgers University. During the marriage, he was employed as an engineer. From 1978 to 1984, plaintiff was a member of NASA and participated in the astronaut program. During that time, the family relocated to Houston, Texas. The family then returned to New Jersey until 1989. During that time, plaintiff was employed by Bell Labs/AT&T. In furtherance of plaintiff's career, the family moved to Sweden in 1989 for one to two years, after which they returned to New Jersey.
Throughout the marriage, other than occasional part-time work, defendant did not work outside the home. Instead, she devoted the bulk of her time to raising the children, caring for the home and supporting her husband's career.
The parties enjoyed a comfortable lifestyle. They lived in a five-bedroom home in Morris Plains. Plaintiff had a membership in the Mendham Golf Club for which he paid a $20,000 membership fee. Both children attended private schools.
In 1997, after AT&T sold its satellite company to Loral SpaceCom, plaintiff was hired as president of the new division, Loral SkyNet. Plaintiff's base salary at the time of the divorce was $225,000, with potential bonuses of up to fifty percent of his gross salary. In 1998, the year prior to the divorce, plaintiff's gross earned income was $312,538.
The parties negotiated a comprehensive Property Settlement Agreement (PSA) at the time of the divorce. Considering plaintiff's income, defendant's status as a homemaker, and the parties' standard of living, the PSA obligated plaintiff to pay permanent alimony of $8,000 per month (reduced to $6,250 until the younger child graduated college).
The PSA provided for the sale of the marital home, with the net proceeds to be divided, subject to various credits to each party, as part of an overall equitable distribution arrangement. After the divorce, defendant first lived in a condominium she purchased but was unable to maintain; she has since resided in a rental apartment. Plaintiff remarried and purchased a substantial home, located on seven acres in Pennsylvania, adjacent to the prestigious Saucon Valley Country Club, in which he maintains a membership. Plaintiff and his current wife adopted a newborn child, who was born on October 19, 2004. Plaintiff's current wife was an AT&T executive. According to plaintiff's certification, she has been unemployed for several years. Nevertheless, we note that on the Case Information Statements (CIS) filed in connection with these motions, plaintiff listed approximately $3,000 per month in daycare expenses.
After the divorce, plaintiff's income continued to escalate, and he continued to maintain a very comfortable lifestyle, apparently above that which he and defendant experienced during their marriage. Defendant never requested an increase in alimony based upon plaintiff's good fortune.
In 2004, plaintiff's employer filed a Chapter 11 bankruptcy petition. Due to restructuring and downsizing, plaintiff was terminated from his position on August 2, 2004. His salary at that time was $380,000, and he received an eighteen-month severance package based upon that annual salary beginning September 7, 2004. He was required to sign an eighteen-month non-competition agreement as part of the package. In February 2006, as the eighteen-month severance package was nearing its expiration, plaintiff filed a motion to reduce his alimony obligation.
He certified that he had consulted with a professional executive coach, John Gaffney, and concluded that at age fifty-nine, and with a downward turn in the satellite and telecommunications industry, along with the stigma of the Loral bankruptcy, it would be difficult for him to find executive employment in his field. Plaintiff further concluded that his best alternative was to seek a career in academia. Utilizing his contacts at his alma mater, Lehigh University, he attempted to do so. He was able to obtain an adjunct position. He also did some consulting work. In all, he projected he would earn only about $30,000 that year. He later obtained a full-time teaching position at Lehigh at an $80,000 salary.
Gaffney filed a certification in support of plaintiff's motion. We can best describe Gaffney's certification as a pro forma confirmation of plaintiff's assertions, setting forth in the most conclusory terms that plaintiff's "options for continuing at an executive level would be very limited" and that pursuit of a position in the academic field was "the best course for resuming [plaintiff's] career following the bankruptcy of his parent company and separation from Loral." No mention was made by Gaffney or plaintiff of any particular efforts that were made to seek a higher paying position more in line with plaintiff's prior history. Plaintiff has made no contention that he has any health problems.
Plaintiff also certified that he has kept his resume active with two leading executive search firms in the industry, but with no results. Again, no details have been furnished.
With his initial motion, plaintiff filed a CIS dated August 25, 2005, a date six months prior to the filing of the motion. It reflected gross earned income for 2004 of $686,000, plus unearned income for that year of $37,000 from three pensions from AT&T and Loral. The CIS reflected total assets of $3.3 million. The largest item was his home, owned jointly with his spouse, valued at $2.4 million. Plaintiff listed as his only debt the $680,000 mortgage on the home. Thus, he set forth a net worth of $2.6 million.
Although plaintiff did not attach current income tax returns to his CIS, he attached recent W-2 forms. In a reply certification, defendant set forth this analysis and these calculations derived from those documents:
He represented that his gross earned income was $686,000 in 2004 and had another $37,000 in unearned income but didn't attached any of the required corporate benefit statements or tax returns. However, there were two W-2s attached to the CIS he filed. One showed income of $698,408 from Loral SpaceCom Corp. and the other showed income of $264,995 from Loral Skynet Mgmt. If he had attached his income tax returns and W-2 forms the court would have a more complete picture of his income. Since he attached W-2s from two different sources in 2004 for two different amounts, he must have received $963,403 in 2004.
Plaintiff filed a reply certification, responding to many of the points made in defendant's certification. However, he did not contradict the above-quoted contention.
Plaintiff did not include with his moving papers 2005 income information. However, with his reply, he filed an updated CIS dated March 15, 2006. He reported earned income for 2005 of $448,748 and unearned income of $88,898. He also noted that at age sixty his military pension would reach pay status.
Determination of the exact amount of plaintiff's income for 2004 and 2005 is not necessary to our disposition. However, this information gives perspective to the relative financial circumstances of the parties at the time of plaintiff's motion to reduce alimony. Plaintiff was earning very substantial sums, while defendant was completely dependent upon the alimony payments in order to live.
After plaintiff filed his motion to reduce alimony, defendant filed a cross-motion to enforce litigant's rights with respect to certain aspects of the PSA. Most particularly, she sought verification that plaintiff continued to maintain life insurance through his current employer in the amount of $250,000 with defendant designated as the beneficiary. The PSA required that coverage, or, if that coverage ceased, substitute coverage in the amount of at least $500,000. Defendant also sought counsel fees.
Although both parties requested oral argument, the judge decided the matter on the papers. He issued an order on March 21, 2006 denying the motions of both parties. He set forth the following statement of reasons:
The Court, without making a finding of whether or not Plaintiff's employment status is voluntary or involuntary, finds that Plaintiff has a net worth over $2.6 million dollars with which he is able to meet his alimony obligation. The Court is able to consider the assets and other financial circumstances of the parties in addition to their incomes. Connell v. Connell, 313 N.J. Super. 426 (App. Div. 1998).
Defendant's request regarding the life insurance policy is denied without prejudice as being outside the relief sought by the Motion. [R. 1:6-3(b).]
The Court has denied the requests for counsel fees as it finds that neither party brought their Motion in bad faith.
On March 28, 2006, defendant filed a motion for reconsideration and to enforce litigant's rights, again pressing the claim regarding life insurance. She again sought counsel fees. On April 3, 2006, plaintiff moved for reconsideration of the March 21, 2006 order, and on April 13, 2006, plaintiff filed a cross-motion (to defendant's March 28, 2006 motion), again seeking a reduction of alimony based upon changed circumstances, reiterating the same position he had previously advanced. On April 27, 2006, defendant filed a cross-motion (to plaintiff's reconsideration motion), seeking to enforce litigant's rights with respect to the life insurance issue and other issues.
Again, both parties requested oral argument, but as with the previous motions, the judge decided the matter on the papers. On May 1, 2006, the judge entered an order directing plaintiff to name defendant as a beneficiary under his will in the amount of $500,000 and to provide proof that he did so before plaintiff's obligation to maintain a life insurance policy would be terminated. The judge also ordered plaintiff to make his alimony payments through the Morris County Probation Department. He denied defendant's request to reconsider the earlier decision denying her request for counsel fees on the prior motion, but ordered plaintiff to pay defendant $2,500 for legal fees associated with the present motion. The judge provided the following statement of reasons:
The Court finds that there are no changed circumstances to warrant a reduction in Plaintiff's obligation. However, the Property Settlement Agreement provides that if Plaintiff's employer no longer provides him with a life insurance policy in the amount of $500,000, then Plaintiff may name Defendant as a beneficiary in his will for that amount.
The Court has denied reconsideration of its decision to not award legal fees in the prior Motion. The Court notes that the parties' respective incomes are not factors for consideration of an award of legal fees in post-judgment applications. To consider the parties' income would inhibit a party from making an application to the Court as the moving party may be ordered to pay the opposing party's legal fees based on nothing more than his or her financial resources. This would have a chilling effect on post-judgment applications.
The Court has carefully considered the Plaintiff's request for counsel fees pursuant to the factors in R. 5:3-5(c). The Court has awarded counsel fees in large part due to Plaintiff's violation of the Property Settlement Agreement as he allowed his life insurance to lapse without notice to Defendant.
On May 16, 2006, the judge entered a third order, denying plaintiff's motion for reconsideration and defendant's request for counsel fees in connection with that motion. The following statement of reasons was provided:
As stated in the March 21 Order, the Court is able to consider the assets and other financial circumstances of the parties in addition to their incomes. Connell v. Connell, 313 N.J. Super. 426 (App. Div. 1998). The Court accepts Plaintiff's representation that some of his assets were the subject of equitable distribution and may be exempt for considering his alimony obligation. However, the Court, even after carving out the portion subject to equitable distribution, finds that Plaintiff has sufficient assets which does not alter his ability to pay. The Court notes that Plaintiff has not attached tax returns to his Case Information Statement to allow a complete picture of his assets and earnings. Further, Plaintiff has now obtained employment at a higher income.
The Court has denied Defendant's request for counsel fees primarily due to Plaintiff's entitlement to bring this application pursuant to R. 4:49-2. Further the Court finds that the Plaintiff did not bring the Motion in bad faith.
On June 5, 2006, plaintiff filed a motion for reconsideration of the May 16, 2006 order. On June 19, 2006, plaintiff filed his notice of appeal. On June 21, 2006, defendant filed a notice of cross-motion to enforce litigant's rights, seeking various items of relief. On July 24, 2006, the judge entered an order denying plaintiff's motion for reconsideration, directing plaintiff to turn over to defendant all tax returns and documents that were previously submitted to the court; holding plaintiff in violation of litigant's rights for failing to pay alimony; setting support arrears at $19,500; and requiring plaintiff to pay interest on that sum. The order further required plaintiff to pay defendant's previously ordered legal fees in the amount of $2,500 by July 31, 2006, in default of which that sum would be reduced to judgment. Finally, the order required plaintiff to pay defendant's counsel fees for the present motion in the amount of $2,479.81. The judge issued the following statement of reasons:
The Court has denied Plaintiff's Motion as the Court Rules do not provide for reconsideration of a Motion for Reconsideration. Further, the Court lacks jurisdiction as the case is presently on appeal. See Accardi v. Accardi . . . and R. 2:9-1. No stay has been sought of the prior Orders.
The Cross-Motion was brought to enforce the existing Orders. Plaintiff has not complied with the Orders nor has he sought a stay of the relief granted therein. As such, the Court finds that Defendant is entitled, for the most part, to the requested relief, including the award of counsel fees. The Court has considered the statutory basis for an award of counsel fees. The Court has not determined that Plaintiff has acted in bad faith. However, a party may be entitled to a discretionary award of counsel fees should it require judicial intervention to enforce prior Orders. This is the basis for the award.
The Court has considered the reasonableness of the fees pursuant to R. 4:42-9 after a review of the Certification of Services of counsel for Defendant.
On August 15, 2006, plaintiff filed an amended notice of appeal from the orders of March 21, 2006, May 16, 2006, and July 24, 2006. On August 29, 2006, defendant filed her notice of cross-appeal from the same orders.
Plaintiff claims the court erred in denying his application for a reduction in alimony. He relies on Lepis v. Lepis, 83 N.J. 139, 146 (1980), arguing that spousal support agreements are subject to modification at any time upon a showing of changed circumstances. He contends that his precipitous drop in income was involuntary and that the judge erred in deeming his assets (in conjunction with his earned and unearned income) a sufficient source to continue paying alimony at the level provided for in the PSA. As part of his argument, plaintiff contends that the judge improperly considered some of his assets which were acquired through inheritance and which he claims are exempt from consideration for this purpose.
We find plaintiff's arguments unpersuasive. A party seeking modification of a prior order bears the burden of making a prima facie showing of changed circumstances. Id. at 157. In a case such as this, where the supporting spouse seeks a downward alimony modification, the central issue is the supporting spouse's ability to pay. Miller v. Miller, 160 N.J. 408, 420 (1999). Plaintiff's substantial assets, whether acquired through inheritance or accumulated through his own substantial earnings, must be considered in this analysis. In Miller, the Court explained:
Although the supporting spouse's income earned through employment is central to the modification inquiry, it is not the only measure of the supporting spouse's ability to pay that should be considered by a court. Real property, capital assets, investment portfolio, and capacity to earn by "diligent attention to . . . business" are all appropriate factors for a court to consider in the determination of alimony modification. We have never suggested that the supporting spouse's income earned from investments should be barred from this calculus. [Id. at 420-21 (citations omitted).]
See Caplan v. Caplan, 182 N.J. 250, 269-70 (2005).
The trial judge found it unnecessary to determine whether plaintiff's downgraded earning status was voluntary or involuntary. Instead, he concluded that, considering the substantial assets plaintiff acknowledged owning, the income imputed from these assets, and plaintiff's earned and unearned income, there was a sufficient basis for continuation of the $8,000 per month alimony figure. We are satisfied that the judge's finding is supported by the evidence in the record.
Further, although courts are informed by Lepis and Crews v. Crews, 164 N.J. 11 (2000), that the marital standard of living is the "touchstone" of a change of circumstance application, it is not merely a matter of numbers, and more than mere accounting is required in the analysis. Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004). Consideration must also be given to the adequacy of the agreement at inception and throughout its history, the presumed understanding of the parties at inception, the reasonable expectations of the parties during the life of the agreement, the manner in which the parties acted and relied on the agreement, and the underlying public policy favoring stability and consensual support agreements. Ibid. These considerations strongly favor continuation of alimony at its present level in this case.
We find no error in the judge's denial of plaintiff's request for a plenary hearing. Although there were factual disputes raised by the competing certifications, as we have stated, accepting plaintiff's version of his assets and earnings, he failed to carry his burden of making a sufficient prima facie showing of changed circumstances that would warrant a reduction in alimony. And, although it might have been preferable to allow oral argument on these substantive motions, see R. 5:5-4(a), we do not find a mistaken exercise of discretion in denying the request here, where there was a voluminous documentary record upon which the decision was based. Finally, we find no mistaken exercise of discretion in the judge's various determinations regarding counsel fees.
We affirm the orders under review substantially for the reasons set forth by the trial judge in support of each order. We are satisfied that the judge's findings are adequately articulated, evidentially supported, and consistent with the controlling legal principles.
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