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Orihuela v. Orihuela

December 17, 2007


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-1441-01.

Per curiam.


Submitted November 26, 2007

Before Judges Sabatino and Alvarez.

This matter arises out of a series of post-judgment rulings by the Family Part in 2006 concerning the terms of a 2003 divorce entered into between plaintiff, Michelle Orihuela ("the mother"), and defendant, Walter Orihuela ("the father"). The issues before us are exclusively financial in nature.

Initially on this appeal, the father had sought review of the Family Part's denial of his motion to modify parenting time with the parties' four children and also to reduce child support relating to the ongoing costs of a nanny. The father subsequently withdrew his appeal. The mother, meanwhile, filed a cross-appeal. She principally challenges the Family Part's continued imputation to her, for purposes of calculating child support, of $97,000 in annual income, an amount the parties had agreed to in their divorce judgment. The mother also contests the Family Part's denial of her application for counsel fees.

After carefully considering the points raised on the cross-appeal, we affirm the Family Part's post-judgment determinations. We do so substantially for the reasons set forth in Judge Thomas Manahan's written statement of reasons dated June 1, 2006, as amended on June 9, 2006.

The following facts and circumstances bear upon the discrete issues before us. The parties were married in 1989. They have four children: twin daughters who are presently thirteen, and two sons who are respectively ages fourteen and ten. During the marriage, the father worked as a pharmaceutical sales representative, while the mother cared for the children and did not work out of the home. The youngest child has special needs that have required the services of a nanny.

Primarily as the result of an inheritance from her grandmother, the mother individually owns a substantial portfolio of stocks and bonds. At the time of the divorce proceedings in 2003, her stock portfolio was worth approximately $1.5 million. It is undisputed that these investments were not marital property and were not subject to equitable distribution. In addition, the mother owned various bonds then worth about a half million dollars. All told, at the time of the divorce, the mother had a portfolio worth approximately $2 million.

The parties were both represented by counsel in negotiating their Amended Final Judgment of Divorce ("FJD") entered in court on May 21, 2003. Among other things, the parties agreed that the mother would retain primary residential custody of the children, with the father having parenting time on a schedule consistent with the terms of an earlier written agreement reached by the parties in January 2003. The parties further agreed to divide equally their assets held in a joint investment account. It was also agreed that the mother would buy out the father's interest in the marital residence. Both parties waived alimony.

With respect to the central issue before us, the father and mother agreed in paragraph 2 of the FJD that "[f]or purposes of child support, a [sum of] $97,000.00 [in] annual income will be imputed to each party." That common $97,000 income figure was derived from applying an agreed-upon 4.85% annual interest rate to the mother's $2 million investment portfolio. Although the father was unemployed at the time of the divorce judgment, the parties agreed that he had the capacity to earn an equivalent amount of $97,000 in the job market, having previously earned as much as $119,000 in 2000.

Applying the State Child Support Guidelines to that common $97,000 income figure, and taking into account the special costs of the nanny and other child care expenses, the parties determined in the FJD that the father would pay the mother $1,990 monthly in child support. The parties further agreed to have the ongoing need for the nanny and other issues of child support reexamined in two years, after the exchange of pertinent financial data.

In support of her cross-motion filed with the Family Part in February 2006, the mother contended that the income formula that she had agreed to in the FJD in May 2003 was inaccurate and unfair. She asserted that she had to liquidate $202,000 of her investment portfolio in order to fund the buyout of the father's interest in the marital home. She also contended that the actual performance of her investment portfolio since the May 2003 divorce had proven to be less than the 4.85% annual rate that she had acceded to in her negotiations with the father, with most of her holdings yielding annual dividends of only 1.8% to 2.0% percent, and some of them paying no dividends at all. The mother also claimed that she would face severe tax consequences if she liquidated the entire portfolio and reinvested it in higher-yielding financial instruments. Consequently, the mother sought an increase in child support, seeking to substitute for the agreed-upon $97,000 income figure specified in the FJD the average of her actual investment income for calendar years 2003, 2004 and 2005, or approximately $40,000 annually.

In opposing the mother's motion to reduce child support, the father attested that the 4.85% return rate in the FJD had been the product of negotiations, using then-prevailing rates for long-term corporate bonds. The father noted that his own expert had advocated that a higher rate of 5.5% be applied to the mother's portfolio, and that the parties had compromised by adopting the 4.85% rate. The father also noted that the mother was formerly a certified dental hygienist and a teacher, and thus had the ability to supplement her investment income substantially if she returned to the work force. The father also reported that his own income had not rebounded to the extent the parties had anticipated at the time of the FJD. The father argued that the mother should not be permitted to renegotiate the FJD. He ...

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