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Davidson v. Davidson

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 21, 2008

ROBIN M. DAVIDSON, PLAINTIFF-RESPONDENT,
v.
BRUCE N. DAVIDSON, DEFENDANT-APPELLANT.

On appeal from the Superior Court of New Jersey, Family Division, Monmouth County, Docket No. FM-13-326-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued on March 4, 2008

Before Judges Gilroy and Baxter.

Defendant Bruce N. Davidson appeals from the November 27, 2006, and February 6, 2007, orders entered in the Family Part. We affirm.

I.

Plaintiff, Robin Davidson, and defendant were married on August 22, 1976, in Massachusetts. Two children, now emancipated, were born of the marriage. A Judgment of Divorce (JOD) was entered on June 2, 1998, in Middlesex County, Massachusetts, incorporating a Separation Agreement (Agreement). Defendant moved to New Jersey about the time of the divorce and married his current wife on October 10, 2004; plaintiff relocated to New Jersey in March 2001.

Defendant's obligation to pay alimony was determined under the Agreement, pursuant to the following formula: "[d]ivide the total combined income of the parties by 1.8; allocate the quotient to the [defendant] and the difference between the quotient and the total combined income to [plaintiff]." Pursuant to that formula, the parties agreed that commencing on June 4, 1998, defendant would pay alimony to plaintiff in the amount of $864 per week. The Agreement required an annual review of defendant's alimony obligation: "[e]very year on the anniversary of this Agreement, the parties shall exchange their prior years' income tax returns, and based on the income reported on such returns, adjust the alimony amount upward or downward, using the same formula by which the current alimony has been determined . . . ." Additionally, the Agreement provided in Paragraph 17 that "[t]his Agreement shall be construed and governed according to the laws of the Commonwealth of Massachusetts"; and in Paragraph 19 that "[t]his Agreement shall not be altered or modified except by an instrument signed and acknowledged by [defendant] and [plaintiff] or by action of Middlesex County Probate Court."

On August 15, 2006, plaintiff filed a motion, seeking, among other matters, to: 1) register and docket the JOD in the State of New Jersey; 2) hold defendant in contempt of court for violating her litigant's rights; 3) compel defendant to provide income tax returns and W-2 reporting forms for the years 2000 through 2003; and 4) compel defendant to pay alimony arrears and counsel fees. In support of her motion, plaintiff submitted a certification setting forth her contention that defendant was in violation of the Agreement, "because he either did not use the formula properly, or alternatively, he intentionally chose to give me less money [(alimony)] than that to which I am entitled."

Plaintiff stated that defendant had "deducted voluntary contributions to his retirement fund and used this amount as his gross income," contrary to the formula contained in the Agreement, which required him to compute his alimony obligation based on reported income. For example, plaintiff asserted that in the year 2004, although defendant's actual income as shown on his W-2 income tax form was $97,293.41, he calculated his alimony obligation based on $81,293.41, after deducting a $16,000 contribution to his retirement account. Based on this calculation, plaintiff contended that defendant was in arrears for the period from June 2005 through June 2006, in the amount of $7,111.29, and that she could not calculate arrearages for the years 2000 through 2003, because she had not received defendant's W-2 forms for those years.

On September 7, 2006, defendant filed a cross-motion, seeking to: 1) terminate, or in the alternative, reduce his alimony obligation; and 2) terminate his insurance obligation, based on changed circumstances, and to compel plaintiff to pay his counsel fees. In support of his motion and in opposition to plaintiff's motion, defendant submitted a certification. Defendant opposed plaintiff's motion, certifying that he had made all alimony payments to plaintiff for the past eight years, ranging in annual amounts from $29,996.44 to $44,888.89. Defendant asserted that he had forwarded to plaintiff a copy of his federal tax return for each year since the JOD, and that plaintiff had provided him with hers.

Defendant stated that he calculated his alimony obligation using taxable income as reported on the parties' federal 1040 tax forms, acknowledging that his method provided a net income figure for him, after deducting any contributions made to his individual retirement account.

Concerning his motion seeking to terminate, or in the alternative, to reduce his alimony obligation, and to terminate his insurance obligation, defendant certified that in January 2005, three months after his marriage to his current wife, she suffered an anoxic brain injury following complications from the flu, and as a result, his wife receives disability benefits, whereas previously she had worked fulltime as an occupational therapist. As to the injury, defendant stated "[t]he injury has had an impact on both her physical and cognitive functioning, leaving her in need of substantial, ongoing medical monitoring, care and treatment, and incapable of holding employment."

Defendant also certified that on July 28, 2006, he was terminated from employment with Corporate Counseling Associates in New York City, and that the only income he and his wife had were from her disability benefits and his severance pay, which was about to terminate in October of that year. Lastly, defendant requested the court to impute income to plaintiff because, contrary to his circumstances since their divorce, plaintiff pursued and obtained an Associates Degree, a Bachelors Degree, and a Master's Degree in counseling, but only chooses to work minimally as a part-time secretary at Monmouth University, while relying on the alimony payments as the primary source of income. Defendant asserts that plaintiff is fully capable of obtaining employment in the field of her Master's Degree and that "[p]laintiff should be imputed with income earned by those who are counselors and who have a Master's Degree in counseling."

On September 11, 2006, plaintiff filed a reply certification to defendant's cross-motion, certifying that she has not been employed as a secretary for the last one and one-half years. Plaintiff certified that she is presently attending school, pursuing a certification in professional counseling to become a Licensed Therapist. In furtherance of her studies, plaintiff stated:

I am required to work 300 hours per semester without pay. I am working three (3) days a week at a counseling center and going to school two (2) nights a week. Additionally, I am working one (1) day a week as a Graduate Assistant at Monmouth University which pays for one (1) of my courses. Over the next 1-1/2 years, it will be impossible for me to obtain other employment. I leave my house at 7:30 a.m. four days a week, and I return home at 5:30 p.m. on Monday and Tuesday, 8:30 p.m. on Wednesday, and 11:00 p.m. on Thursday. I spend Friday through Sunday doing research at the library, homework, study, and typing papers.

On November 27, 2006, the trial judge resolved the cross-motions without an evidentiary hearing and entered an order with a statement of reasons attached, denying defendant's motion. On the same day, the judge entered a second order, with a statement of reasons attached that, among other matters: 1) ordered the JOD be registered and recognized by the State of New Jersey; 2) declared defendant in violation of plaintiff's litigant's rights; 3) ordered defendant to pay $8,468.87 in alimony arrears, $3,275 in counsel fees, and to provide the financial information requested by plaintiff, all within thirty days. On December 15, 2006, defendant filed a motion for reconsideration. The motion was denied by order of February 6, 2007.

On appeal, defendant argues:*fn1

POINT I.

MASSACHUSETTS LAW MUST BE CONSISTENTLY APPLIED TO INTERPRET THE PARTIES' PROPERTY SETTLEMENT AGREEMENT.

A. THE COURT FAILED TO CONSISTENTLY APPLY EITHER MASSACHUSETTS OR NEW JERSEY LAW.

B. MASSACHUSETTS LAW SHOULD BE APPLIED CONSISTENTLY IN THIS CASE.

POINT II.

MR. DAVIDSON HAS MADE A PRIMA FACIE [CASE] SHOWING OF A CHANGE IN CIRCUMSTANCES UNDER BOTH NEW JERSEY AND MASSACHUSETTS LAW.

A. CALCULATION OF INCOME AND MODIFICATION OF SUPPORT IN MASSACHUSETTS.

1. CALCULATION OF INCOME UNDER MASSACHUSETTS LAW.

2. IMPUTATION OF INCOME UNDER MASSACHUSETTS LAW.

3. CHANGE OF CIRCUMSTANCES UNDER MASSACHUSETTS LAW.

B. CALCULATION OF INCOME AND A CHANGE IN CIRCUMSTANCES UNDER NEW JERSEY LAW.

1. CALCULATION OF INCOME UNDER NEW JERSEY LAW.

2. IMPUTATION OF INCOME UNDER NEW JERSEY LAW.

3. CHANGE OF CIRCUMSTANCES UNDER NEW JERSEY LAW.

POINT III.

PLAINTIFF'S INCREASED EDUCATIONAL LEVEL MUST BE CONSIDERED AS A CHANGE IN CIRCUMSTANCES.

POINT IV.

THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING COUNSEL FEES.

POINT V.

PUBLIC POLICY, AS A MATTER OF LAW, NECESSIT[ATES] THE ABILITY TO MODIFY ALIMONY AND RELATED AGREEMENTS.

II.

"The scope of appellate review of a trial court's fact-finding function is limited. The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Such deference is "especially appropriate when the evidence is largely testimonial and involves questions of credibility." In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997). Moreover, "[b]ecause of the family courts' special jurisdiction and expertise in family matters, appellate courts should accord deference to family court fact-finding." Cesare, supra, 154 N.J. at 413. However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

We have considered defendant's arguments in light of the record and applicable law, and are not persuaded by any of them. We affirm substantially for the reasons expressed by the trial judge in his statement of reasons attached to the orders of November 27, 2006, and February 6, 2007. R. 2:11-3(e)(1)(A). Nevertheless, we add the following comments.

The parties do not contest that the Agreement should be interpreted and modified in accordance with the Law of Massachusetts. However, defendant argues that the trial judge applied the wrong legal standard in determining that he had to prove a prima facie case by "something more than a material change of circumstances," rather than the lesser standard of "a material change of circumstances." We agree that the judge applied the wrong standard of review. However, the error is harmless, because we are satisfied that even under the lesser standard, defendant did not establish a prima facie case of a material change in circumstances. See Glaser v. Downes, 126 N.J. Super. 10, 16 (App. Div. 1973) (holding that appeals are taken from judgments, not from oral or written decisions), certif. denied, 64 N.J. 513 (1974). An order of judgment will be affirmed on appeal if it is correct, even though the judge gave the wrong reasons for it. Isko v. Planning Bd. of Twp. of Livingston, 51 N.J. 162, 175 (1968), abrogated on other grounds, Commercial Realty Res. Care v. First Atl. Properties Co., 122 N.J. 546 (1991).

We disagree with the trial judge's blanket conclusion that "[p]arties who seek to alter or modify a written settlement agreement must show 'something more than a material change in circumstances,' commonly referred to as 'countervailing equities.'" Under Massachusetts law, if an agreement is merged in the judgment, the agreement loses its identity and does not survive a judgment of divorce; "it retains no independent legal significance apart from the judgment." DeCristofaro v. DeCristofaro, 508 N.E. 2d 104, 108 (Mass. App. Ct. 1987). On "merging, modification of the judgment is governed by the usual rule, which requires a showing of a material change in circumstances." Cournoyer v. Cournoyer, 663 N.E. 2d 863, 865 (Mass. App. Ct. 1996).

"However, if a validly entered separation agreement fixing inter-spousal support is incorporated in a divorce judgment, but survives the judgment, the agreement retains its force as an independent contract. In that event, the agreement is specifically enforced, absent 'something more than a material change of circumstances' . . . ." Ibid. (citation omitted).

Here, the Agreement was merged with the JOD. The JOD provides that, "the parties are ordered to comply with the terms of an Agreement dated June 2, 1998[,] filed, incorporated and merged in this Judgment, except for provisions relating to the division of assets, which provisions survive and have independent legal significance." (emphasis added). Furthermore, in Paragraph 11 of the Agreement, it states:

At any hearing on the divorce complaint, an executed copy of this Agreement shall be submitted to the [c]court with the request that the Agreement be incorporated into the Judgment of divorce and that the provisions with respect to . . . alimony . . . be merged into such judgment. Notwithstanding such incorporation and merger, in all other respects this Agreement . . . shall survive the same as an independent contract . . . ."

[(emphasis added).]

The Agreement merged with the JOD, and the parties did not exempt "alimony" from its merger with the judgment. Accordingly, under Massachusetts law the alimony provision did not survive the judgment, and the Agreement should be enforced, absent "a material change of circumstance," rather than absent "something more than a material change of circumstances." Nevertheless, even when applying this lesser standard of "a material change of circumstances," which is the same as the New Jersey standard, we are satisfied that defendant has not presented circumstances meriting termination or reduction of his alimony obligation under Massachusetts law.

Because the Agreement merged with the JOD, defendant, in seeking to modify the Agreement by reducing or terminating his alimony obligation, must establish that there was a material change in circumstances since the entry of the divorce. Ibid.

The material change in circumstances may be in the needs, resources, or incomes of either party. Downey v. Downey, 774 N.E. 2d 1149, 1151-52 (Mass. App. Ct. 2002). A trial judge must weigh all relevant circumstances of both parties when considering an application for modification of a support obligation. Ibid. Defendant argues on appeal, as he did in the Family Part, that he had established a material change of circumstances based on his loss of employment caused in part by his wife's illness and by plaintiff's earning potential, having continued her formal education, which included her receiving a Master's Degree in counseling. We disagree.

The trial judge correctly rejected defendant's first argument based on his loss of employment, concluding that defendant had not established that the loss of employment was anything more than temporary, because defendant failed to demonstrate that he had attempted to obtain employment in another field of endeavor. We discern no valid reason to interfere with the trial judge's findings of fact or conclusions of law on this issue. See Schuler v. Schuler, 416 N.E. 2d 197, 201-02 (Mass. 1981), overruled in part on other grounds, Keller v. O'Brien, 683 N.E. 2d 1026 (Mass. 1997).*fn2

Defendant argues next that plaintiff "should be imputed with income based on her skills and ability to earn [, and] that [his] alimony obligation must be calculated considering plaintiff's earning capacity, and she must be imputed with income based on this earning capacity."

Although in the proper circumstances, Massachusetts' courts have held that "[a] judge is not limited to a party's actual earnings but may . . . consider potential earning capacity," Heins v. Ledis, 664 N.E. 2d 10, 16-17 (Mass. 1996), the courts express caution "'against relying unduly on the income-earning potential of a wife and mother who has been out of the regular job market for decades.'" Kelley v. Kelley, 835 N.E. 2d 315, 321-22 (Mass. App. Ct.) (quoting Frederick v. Frederick, 560 N.E. 2d 151, 154 (Mass. App. Ct. 1990)), review denied, 838 N.E. 2d 577 (Mass. 2005); see Goldman v. Goldman, 554 N.E. 2d 860, 865 (Mass. App. Ct. 1990) (in long-term marriage, not appropriate to focus on "full-time earning capacity of the wife and penalize her for making a decision to be at home"). While it is appropriate for a judge to consider potential, rather than actual, earnings of a spouse, Schuler, supra, 416 N.E. 2d at 203, "ascribing to the wife the income that her education ought to bring may be discordant with reality." Kehoe v. Kehoe, 583 N.E. 2d 283, 285 (Mass. App. Ct. 1992).

Here, following twenty-two years of marriage, plaintiff has recently dedicated herself and expressed commitment to pursuing a certificate in professional counseling to become a Licensed Therapist. Plaintiff is still attending school, pursuing that degree, and is not employed as a secretary but rather is required to work 300 hours per semester without pay. She presently works three days per week at a counseling center and attends classes two nights per week. She also works one day per week as a Graduate Assistant at Monmouth University, which pays for one of her courses of study. We are satisfied that the trial judge, after considering plaintiff's actual current earnings, the educational degrees she holds, and her prior employment history, correctly determined that the mere possession of the Master's Degree does not constitute a material change of circumstances under Massachusetts law.

Defendant does not challenge plaintiff's contention that she is not presently eligible to practice as a Licensed Therapist; that the educational*fn3 courses plaintiff is presently pursuing are not necessary for her to become a Licensed Therapist; or that she is not pursing her formal education in a reasonable period of time. Rather, defendant asserts that the court should have imputed income to plaintiff based on her earning potential because of the educational degrees she presently holds. We are satisfied the trial judge correctly denied the application to impute income. Modification of a prior property settlement agreement should not be based on a material change of circumstances which are only expected but have not yet occurred. See McDonald v. McDonald, 6 N.J. Super. 11 (App. Div. 1949). Defendant's application to impute income to plaintiff will be more appropriate once the plaintiff has completed her required courses of education.

Affirmed.


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