August 14, 2008
CHRISTINE DECKER, PLAINTIFF-APPELLANT,
MICHAEL DECKER, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, FM-03-1184-94.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted July 29, 2008
Before Judges S.L. Reisner and LeWinn.
This appeal stems from a post-judgment dispute over the parties' respective obligations to contribute to the cost of the special education needs of one of their children. Plaintiff Christine Decker appeals from the March 20, 2007 order of the Family Part requiring defendant Michael Decker to contribute eighteen percent of those expenses, amounting to $6,420; plaintiff further appeals the May 18, 2007 order of the Family Part denying her motion for reconsideration.
On appeal, plaintiff argues that the trial court erred in (1) imputing income to her; (2) determining the actual expenses at issue; and (3) determining that defendant had no ability to pay a larger proportion of those expenses. Having reviewed the record in light of these contentions, we affirm substantially for the reasons set forth by Judge John E. Harrington in his March 20, 2007 order, and for the reasons set forth by Judge Evan H. C. Crook, in his May 18, 2007 order.
Plaintiff owns and operates her own business, Amenity Rentals, Inc. In his March 20, 2007 order, Judge Harrington noted that plaintiff has failed to provide the Court with business tax returns despite requests for same. This business tax return is essential to determining Plaintiff's income both because as owner of her business Plaintiff may adjust her compensation and because certain business deductions permissible under the Internal Revenue Code are "added back in" as income available to pay child support under Appendix IX-B of the Child Support Guidelines. Many of these tax-deductible expenses overlap with expenses that might be claimed on a Case Information Statement [CIS] budget. In this instance, Plaintiff running significant expenses through her business would explain how she is able to maintain an annual budget of $250,368 despite a salary of only $96,516 and unearned income of $9,891.
Based upon the expenses set forth in plaintiff's CIS, the court calculated that she "experience[d] a deficit of $109,560[,]" leading the court to conclude "that this additional $109,560 represents income received by Plaintiff either through her business or through . . . sources not currently in evidence." The judge therefore imputed an additional $109,560 in annual income to plaintiff "as net income because it is extrapolated from the expenses on Plaintiff's budget and expenses are paid with net income." The court imputed total net income of $190,112 to plaintiff "without prejudice." The court added: "Plaintiff may bring [an] application before this Court to recalculate her income based upon the provision of her business tax returns and all applicable schedules and attachments."
Regarding defendant's income, the court relied upon an August 31, 2005 child support order imputing $49,002 in taxable income and $1,296 in non-taxable income to defendant, resulting in net income of $41,964. The court found "this imputation to be appropriate given that Defendant continues voluntarily as a full-time college student despite his ability to work. The Court finds no reason to distinguish income imputed for the payment of child support from income imputed for the payment of extraordinary expenses related to a child."
In her motion for reconsideration, plaintiff contended that her prior CIS contained numerous errors overstating her expenses and, therefore, the judge had erred in imputing income to her based on those inflated expenses. Plaintiff appended revised schedules of expenses totaling $104,784 per year. Plaintiff further certified that she had previously submitted her tax return including "the [IRS Form] K-1 income [she] receive[s] as a partner in [her] business." Plaintiff certified that she was re-submitting her K-1, as well as a profit and loss statement for the business dated December 31, 2005.
Plaintiff also contended that the costs incurred for the child's special education needs had increased from the amount she had presented in her prior motion, $35,664.10, to a total of $66,353.33. After deducting reimbursements paid by the child's school district, plaintiff asserted that her total out-of-pocket expenses were $40,045, plus $3,164.10 for transportation. Plaintiff additionally sought reimbursement of $1500 in legal fees she incurred on behalf of the child in a juvenile delinquency proceeding. Thus, plaintiff sought defendant's contribution to a total amount of $44,709.10.
In denying reconsideration, Judge Crook granted plaintiff the benefit of the doubt regarding her adjusted CIS expenses, recognizing "that mistake of a party is an appropriate ground for relief under R. 4:50-1 . . . ." However, the judge stated:
[E]ven assuming, . . . that the court were to recognize Plaintiff's reduced [CIS] budget, the Court does not have sufficient information to recalculate Plaintiff's income. The Court made its prior calculation in the absence of appropriate proof as to Plaintiff's income; the Court will not now recalculate Plaintiff's income in the continued absence of appropriate proof.
The court noted that, despite plaintiff's certification that she had attached her K-1, she had in fact attached the Schedule E from her personal tax return. The court stated that the submitted form "is not a substitute for the K-1 form, which would provide specific information such as the business's payments, dividends, gains, deductions, expenses, and distributions." As Judge Harrington had found, Judge Crook noted that the K-1 "is essential to calculation of Plaintiff's income because under Appendix IX-B of the Court Rules, certain business expenses allowed by the IRS are added back as income for the purpose of calculating child support and ancillary obligations."
The judge noted that plaintiff's profit and loss statement was "not submitted on [the] letterhead of any recognized accounting firm, nor is it signed or certified by anyone purporting to have the competence or authority to prepare such a document." The court held:
To the extent Plaintiff seeks relief, she must provide actual proof of her business income in the form of K-1 statements for 2005 and 2006 as well as all attachments and forms filed related to the business for 2005 and 2006. Plaintiff has been provided ample opportunity to supply this information but has consistently failed to do so. Should Plaintiff make future application regarding these issues the Court will consider an application from defendant for an award of counsel fees.
In denying plaintiff's request to increase the total amount of the special education expenses to be shared by the parties, the judge noted that plaintiff "apparently had information about this increased cost prior to the parties' previous court appearance. Further, the Court finds that Plaintiff's certification, without more, does not establish that extending [the child]'s stay was necessary."
Finally, the judge declined to increase defendant's proportionate share of the special education expenses, finding that Judge Harrington had engaged in a balancing of all of the pertinent factors and imposed an "amount of contribution . . . [that] was quite substantial."
In reviewing these decisions, we accord significant deference to the fact finding of Family Part judges in consideration of their "special expertise" in the field of domestic relations. Cesare v. Cesare, 154 N.J. 394, 412-13 (1998). Where such fact finding is based upon competent substantial evidence of record, we will not disturb the result. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).
Applying those standards to the two orders under review, we find no cause to disturb either ruling. Plaintiff was aware that Judge Harrington's order was based in significant part upon her failure to provide her full business tax returns to enable the court to determine her true income. Despite such notice, plaintiff failed to submit this essential documentation in her motion for reconsideration. Two Family Part judges deemed plaintiff's K-1 forms critical to support her claims regarding her earnings. We find no error in the judges' analysis and, hence, no error in their denials of plaintiff's applications based on her failure to submit the required documentation.
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