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Masaya v. Griffin

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 5, 2008

TASARA MASAYA, PLAINTIFF-RESPONDENT/CROSS-APPELLANT,
v.
PETER GRIFFIN (DECEASED) AND DEIRDRE NEWMAN, DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FD-07-6339-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 29, 2008

Before Judges Coburn and Grall.

This appeal is from a final order of the Family Part. Defendant Peter Griffin is deceased. Deirdre Newman, as executrix of Peter Griffin's estate and holder of his power of attorney prior to his death, appeals, and plaintiff Tasara Masaya cross-appeals. Griffin was the father of three children -- a son and daughter born to Newman and a daughter born to Masaya. The orders at issue on this appeal allocate the proceeds of a policy of insurance on Griffin's life among his three children and direct distribution of one-hundred percent of his 401K account to Masaya, on behalf of her daughter, in payment of Griffin's child support arrears. For reasons stated below, we affirm the order awarding the 401K, vacate the orders governing distribution of Griffin's life insurance and remand for further proceedings.

Newman and Griffin married in 1985 and divorced in December 2000. They had a son who is now nineteen years of age and is a student in college. They had a daughter who is now seventeen and is a student in high school.

Newman and Griffin addressed life insurance in paragraph 2.4 of their property settlement agreement (the Newman/Griffin PSA or PSA). It states that Griffin is the owner of a "$150,000" policy and "also entitled to life insurance as a benefit of his employment," in an "amount that is the equivalent of four times his current salary or income." The PSA requires Griffin to "immediately name the children as the sole, exclusive irrevocable and equal beneficiaries" on both policies. Upon emancipation of the first child, Griffin's insurance obligation was to be reduced by one-half. Upon emancipation of both children, the obligation was to "abate altogether." Neither of Newman's children is emancipated; pursuant to paragraph 2.2 of the Newman/Griffin PSA, Griffin's obligation to support each child continues while the child is attending high school or college.

Masaya and Griffin had a child in December 2004, which was four years after Griffin's divorce from Newman. Griffin earned $115,000 in 2004. In 2005, Masaya filed a complaint for custody and child support. On June 21, 2005, the court entered a consent order that incorporated their agreement (Masaya/Griffin CSA or CSA). That CSA includes the following relevant provisions: a child support obligation of $255 per week (approximately $1097 per month), effective December 7, 2004; arrears fixed at $6,630 as of May 31, 2005; a life insurance obligation of $200,000 to secure child support; and an obligation to pay fifty-percent of work-related child care costs incurred by Masaya.

Shortly after entry of the CSA, Griffin, who previously had been diagnosed and treated for cancer, learned that his disease had returned. He was not able to work after the fall of 2005.

On October 5, 2006, Masaya obtained an order to show cause that temporarily restrained Griffin from withdrawing funds from his bank accounts and required him to change the beneficiary designation on any life insurance policy to name Masaya's daughter as the beneficiary. A return date was set for October 19, 2006.

On October 19, 2006, Griffin was in the hospital. Before the return date, he gave Newman a power of attorney, and she filed papers in opposition to Masaya's order to show cause. Newman appeared in court on October 19, 2006. She was not joined as a party to the litigation and appeared pro se on behalf of Griffin. Masaya was represented. Both Masaya and Newman were placed under oath and addressed the court.

Masaya provided the following information. Griffin owed Masaya child support in the amount of $24,990; he had paid a total of $3125 since the consent order was entered. Based on her review of his check register in July 2006, Masaya thought that Griffin had $230,000 in one account. Masaya works part time as an independent contractor in the field of systems management. Although she testified that she earns $500 per day and works approximately fifteen days per month, she asserted that she could earn only $30,000 per year.

Newman produced bank records showing that the balance in the account Masaya referenced did not exceed $5000 at any point after April of 2005. According to her, Griffin was receiving $3628 in disability benefits and had unpaid hospital bills in the amount of $57,000. Newman could not explain a document that indicated Griffin's disability benefit was $5000 per month, but she knew that he received only $3628 per month.*fn1 Newman testified that Griffin had not been able to secure additional life insurance and had one policy of insurance on his life in the approximate amount of $100,000. Newman advised the judge, however, that she was not certain about the policy amount or about the designated beneficiaries and suggested that no order be entered until she had the information. Newman also reported that Griffin's only assets were his life insurance policy, the checking account and a retirement savings account; she agreed to provide a statement for that account within three days of the proceeding. Newman further informed the court that her daughter and Masaya's daughter would both receive social security benefits in the approximate amount of $1250. Newman's son, who was then over the age of eighteen, would not receive a share of the benefits. Newman did not mention the Newman/Griffin PSA.

As noted above, that PSA obligated Griffin to maintain life insurance for the benefit of Newman's children.

The judge considered Newman's testimony about Griffin's disability income, the ages of the three children, and Masaya's testimony about her own income and the child support payments Griffin had made. The judge also calculated child support owed to Masaya.*fn2 Subsequently, the judge entered an order, which was amended on October 25, 2006. Those orders did the following: reduced Griffin's child support obligation, effective October 19, 2006, to $145 per week;*fn3 fixed arrears at $25,140.58, as of October 19, 2006; required immediate payment of arrears from Griffin's IRA account, or any retirement account, no later than October 29, 2006; required Griffin to maintain all policies of insurance on his life, with a death benefit "of at least $100,000, of which [Masaya's daughter] is entitled to [eighty-five percent]"; required defendant to "immediately change the beneficiary designation of said policies to provide that [Masaya's daughter] is the beneficiary of [eighty-five percent] of defendant's death benefits and that [Newman's daughter] is the beneficiary of [fifteen percent] of said benefits." In effect, the order precluded Griffin from maintaining any life insurance for the benefit of Newman's son.

Griffin died on December 20, 2006, but this litigation continued. By way of order to show cause filed in the Masaya/Griffin child support case on January 2007, Newman, as executrix of Griffin's estate, sought to vacate the October 2006 orders.

In support of her application, Newman relied on relevant circumstances that were not previously brought to the attention of the court. She provided the Newman/Griffin PSA and focused on paragraph 2.4, which required Griffin to maintain life insurance for the benefit of her children. She reported that it was her "understanding" that her children were the designated beneficiaries of Griffin's life insurance policy and retirement savings, but did not provide the relevant documents. She acknowledged that neither she nor Griffin had changed the beneficiaries on Griffin's life insurance policy in accordance with the October 2006 orders. Newman also provided a copy of Griffin's will in which he devised all property to Newman's children in equal shares and "intentionally ma[de] no provision for any other child of [his]." She further advised the judge, and Masaya confirmed, that each of Griffin's daughters would receive a social security benefit of $1595 per month until Newman's daughter reached the age of eighteen; thereafter, Masaya's daughter would receive $3000 per month until her eighteenth birthday. Newman's son, who was over the age of eighteen, would not receive any social security benefits.

On January 26, 2007, the judge entered an order "split[ting]" Griffin's life insurance policy benefits forty percent to Masaya's daughter and fifteen percent to each of Newman's children and awarding the "entirety" of Griffin's 401K to Masaya's daughter. On March 9, 2007, the judge entered a qualified domestic relations order designating Masaya, on behalf of her daughter, as the alternate payee of one-hundred percent of Griffin's retirement account balance. The balance of that account was approximately $29,000.

I.

On appeal, both Masaya and Newman object to the judge's order "split[ting]" Griffin's life insurance policy. Newman contends that the judge had no authority to enter an order changing the beneficiaries Griffin had designated, and Masaya contends that the judge erred in revisiting the orders of October 2006, which designated her daughter as a beneficiary of eighty-five percent of Griffin's life insurance.

The legal principles that govern the question of Griffin's life insurance are clear. The provisions of the Newman/Griffin PSA and the Masaya/Griffin CSA that required Griffin to maintain policies of insurance on his life for the benefit of his children were valid when entered. See Grotsky v. Grotsky, 58 N.J. 354, 355, 361 (1971) (rejecting a challenge to a provision of a divorce judgment requiring the father to maintain life insurance for the benefit of the children and construing N.J.S.A. 2A:34-23 as authorizing such orders); see generally DeCeglia v. Estate of Colletti, 265 N.J. Super. 128, 133 (App. Div. 1993) (construing the New Jersey Parentage Act, N.J.S.A. 9:17-38 to -59, and concluding that a reading of N.J.S.A. 9:17-45 and N.J.S.A. 9:17-53 that afforded children born "out of wedlock more limited rights" than those afforded to children of divorced parents would "raise serious constitutional problems").

A parent obligated to maintain life insurance for the support of a child cannot effectively terminate the obligation by disregarding or taking action inconsistent with the obligation. When incorporated in an agreement or court order, the parent's obligation to provide such insurance for the benefit of his or her child gives the child an equitable interest in the proceeds of a policy of insurance on that parent's life, regardless of the beneficiary designation in effect at the time of his or her death. Della Terza v. Estate of Della Terza, 276 N.J. Super. 46, 48-49 (App. Div. 1994); see Travelers Ins. Co. v. Johnson, 579 F. Supp. 1457, 1460-63 (D.N.J. 1984) (approved in Della Terza, supra, 276 N.J. Super. at 49); Aetna Life Ins. Co. v. Bunt, 754 P.2d 993, 998-99 (Wash. 1988) (same); see generally DeCeglia, supra, 265 N.J. Super. at 139-40 (discussing and approving the District Court's decision in Travelers and the Washington Supreme Court's decision in Aetna).

Where a child of a deceased parent has an equitable interest in the proceeds of a policy of insurance based upon the deceased parent's obligation to provide such insurance for the benefit of the child, that interest is enforceable as an equitable assignment. Della Terza, supra, 276 N.J. Super. at 49. Further, where a parent has offspring born after entry of an order establishing his or her obligation to maintain life insurance for children of a prior relationship, the prior obligation is enforceable regardless of a subsequent redesignation of beneficiaries after the birth of an additional child. Id. at 50-51.

Based on the foregoing principles, we reject Masaya's claim that the judge abused her discretion in revisiting the orders of October 2006 on Newman's January 2007 application to vacate. Even if we were to assume that the October 2006 orders related to child support were final and not subject to modification based on changed circumstances in accordance with Lepis v. Lepis, 83 N.J. 139 (1980), or to reconsideration pursuant to Rule 4:49-2 because of Newman's delay, we would conclude that Newman stated grounds adequate to obtain relief from judgment pursuant to Rule 4:50-1. See R. 4:50-1 (a) (excusable neglect), (e) (inequity of prospective application) and (f) (reason justifying relief from the operation of the order).

In support of her application to vacate, Newman provided additional relevant evidence that she cannot be faulted for failing to provide in October 2006. Newman was not a party to the October proceedings; she appeared only as Griffin's representative. In October 2006, because she was not a party and Masaya did not seek modification of the Newman/Griffin PSA, Newman did not have fair notice of the need or opportunity to defend the rights of her children under that PSA. See Raynor v. Raynor, 319 N.J. Super. 591, 600-04 (App. Div. 1999) (discussing joinder, intervention and effective participation). Moreover, at the hearing in October 2006, Newman advised the judge that she did not know the value of Griffin's policy or the beneficiaries he had designated and suggested that the judge defer decision until that information was available.

In addition, there were changed circumstances relevant to the equities of and justifying relief from the judgment. First, under Della Terza, Griffin death's gave Newman's son and daughter an equitable assignment of the proceeds of Griffin's life insurance policy based on the Newman/Griffin PSA. 276 N.J. Super. at 48-51. Even if Griffin had re-designated the beneficiaries of his life insurance policy as required by the orders of October 2006, his action would not have obliterated or modified the equitable interest of Newman's children. Ibid. The orders of October 2006 were entered without consideration of and did not amend or modify that judgment. Second, circumstances relevant to the needs of Masaya's daughter, which the judge considered in fixing her share of the policy of insurance, changed with Griffin's death. When Griffin died, Masaya's daughter acquired a right to social security benefits that compared quite favorably to the child support Griffin was obligated to pay pursuant to the Masaya/Griffin CSA.

Masaya also claims that the judge erred by permitting Newman and her children to benefit from Newman's culpable failure, as holder of Griffin's power of attorney, to change the beneficiary designations in accordance with the orders of October 2006. As noted above, however, any change in beneficiaries based on those orders would not have had any impact on the respective rights of Griffin's children. Della Terza, supra, 276 N.J. Super. at 48-51.

Masaya also argues that the judge had the authority to modify and should have modified the Newman/Griffin PSA. But Masaya never sought that relief. Masaya sought to enforce the Masaya/Griffin CSA, which did not give her daughter an interest in any life insurance Griffin already held. The CSA simply required Griffin to secure a policy of insurance on his life, which subsequently proved to be impossible in light of his cancer. Masaya knew that Griffin had cancer that was in remission when that CSA was entered and could not have reasonably expected that he would easily acquire additional life insurance. See id. at 50-51 (considering reasonable expectations based on an order requiring life insurance for the benefit of a child).

For all the foregoing reasons, we cannot conclude that the judge erred by taking action to modify the October 2006 orders.

Newman contends that the order the judge entered in January 2007 is erroneous. We agree. Pursuant to this court's decision in Della Terza and the Newman/Griffin PSA, Newman's children had an equitable assignment in the proceeds of the policies of insurance on Griffin's life equivalent to $150,000 and the value of any employment-related insurance policy he held at the time of his divorce from Newman which he retained at the time of his death. 276 N.J. Super. at 50-51 (limiting the equitable interest of a child of the decedent's first marriage to the value of the policy at the time the judgment of divorce ending that marriage was entered, because the judgment did not specify the amount of the insurance required).

In this case, the judge did not refer to Della Terza or any other legal authority, and it is apparent that neither party produced evidence adequate to permit the judge to consider the matter in accordance with the principles enunciated in that case. No policy of life insurance, including the policy in place at the time of Griffin's death and divided by the judge, was produced.

Because the interests of Griffin's three children are at issue, we conclude that it is appropriate to remand so that the judge can reach a decision on the basis of a competent and adequate record and controlling legal principles. We simply add that the issue of any right to child support that Masaya's daughter might have against Griffin's estate was not raised below or on appeal. See Kiken v. Kiken, 149 N.J. 441, 453 (1997); DeCeglia, supra, 265 N.J. Super. at 133 (enforcing support obligation against estate); Koidl v. Schreiber, 214 N.J. Super. 513, 516-17 (App. Div. 1986) (holding that support order entered against father who admitted paternity would be interpreted as requiring support payments to continue after father's death). Masaya presents no argument based on any of those precedents.

II.

Newman contends that the judge erred by entering an order providing for payment of child support that Griffin owed to Masaya prior to his death. She argues that the order is in conflict with 29 U.S.C.A. 1056(d)(1). The argument lacks sufficient merit to warrant more than the brief comments that follow. R. 2:11-3(e)(1)(E). This order entered by the Family Part to provide for payment of child support arrears and approved as a qualified domestic relations order is permitted by federal law. See 29 U.S.C.A. 1056(d)(3)(B)(ii), (C), (D). Newman does not contend that the judge erred in calculating the arrears.

Affirmed in part; reversed in part and remanded for further proceedings.


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