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Kotbi v. Kotbi


August 27, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1717-06.

Per curiam.


Submitted May 13, 2008

Before Judges Yannotti and LeWinn.

Plaintiff appeals from provisions of the April 13, 2007 order of the Family Part denying her requests for various forms of relief from the final judgment of divorce issued on January 26, 2007. Specifically, plaintiff seeks a new trial on issues of alimony, child support, equitable distribution and counsel fees.*fn1 For the reasons that follow, we reverse and remand for a new trial on alimony, child support, equitable distribution and counsel fees.

The parties were married on August 5, 1997. Two children were born of the marriage. The record does not disclose the date on which plaintiff filed her complaint for divorce. However, a divorce trial was held on December 19, 2006.

At the outset of trial, plaintiff's counsel stated that the parties "only have two assets, the house, and the . . . pension." Therefore, counsel stated, the only remaining issues were parenting time and alimony.

Plaintiff testified that she has been employed as a real estate appraiser since 2003. Plaintiff reviewed the parties' federal income tax returns for 2003, 2004 and 2005. The record reflects that the parties had joint income of $124,985 in 2005. Plaintiff testified that, of that amount, $14,746 represented her net earnings.

When plaintiff stated that the tax returns did not accurately represent her income, counsel asked: "How much is your income?" Plaintiff responded: "I'm not really sure, but it's somewhere between [$]50 and [$]60,000." Plaintiff testified that she received a weekly check from her employer, TNC Appraisals; however, no pay stubs were introduced into evidence. Plaintiff testified that, in addition to paying a car lease for her business, she also had to "pay [her] own taxes out of that $60,000[.]"

Plaintiff testified that the parties owned a marital residence; an appraisal valued the property at $411,000. As of the time of trial, the property was listed for sale with an asking price of $419,000; however, no offers to purchase had been made as of that time. The outstanding mortgage balance at the time of trial was $190,664.

Plaintiff testified that she made the monthly mortgage payment of about $1,000. Plaintiff stated that defendant was under a pendente lite order to pay two-thirds of the mortgage, but he had not made those payments. Plaintiff introduced evidence that defendant's arrears on his mortgage payment obligation were $11,906 as of October 20, 2006. Plaintiff testified that she met the monthly mortgage expense by using her paychecks as well as credit cards. Plaintiff sought a credit for defendant's mortgage arrears from her share of the proceeds of sale of the marital residence.

Plaintiff stated that defendant was also under a pendente lite order to pay child support of $490 per week. She testified that defendant's child support arrears were "between five and $6,000." Plaintiff sought a probation department audit to determine the exact amount of the arrears and to receive a credit for that amount upon the sale of the marital residence.

Plaintiff also testified that she had retained a prior attorney and, as of the time of trial, still owed him approximately $9,000. She sought contribution from defendant to those outstanding counsel fees.

On cross-examination, plaintiff acknowledged that in 2005 she had gross income of $73,875. The 2005 tax return listed various business expenses, such as $4,891 for depreciation; $19,564 for the "[c]ost of goods sold"; and $3,358 for "[o]ther expenses[.]" Plaintiff could not explain these figures. Plaintiff stated that when she and defendant separated, her credit card debt was approximately $5,000; however, it had increased to approximately $25,000 because of her need to meet the mortgage payments and other bills without assistance from defendant.

Plaintiff briefly reviewed her case information statement (CIS) at trial. She described some of her current living expenses, but did not testify as to the parties' marital lifestyle. Plaintiff's CIS listed expenses for the "joint marital lifestyle" totaling $12,411 per month. None of those marital lifestyle expenses were addressed at trial.

Plaintiff was asked to describe defendant's employment. She testified:

It is not a regular job, where he can go to work from nine to five. It's . . . banquets at the hotel, and he works breakfast, lunch, and dinner, and whenever there is [a] function there is work.

Whenever there is no function, there is no work. Some weeks he could work ten jobs, . . . meaning breakfast, lunch, and dinner.

That's three jobs a day. So, he could do ten jobs a week, or he could do two jobs a week, and with the child support, he's in arrears, because he hasn't worked so many weeks.

Defendant testified primarily about parenting time issues. Defendant filed no CIS and addressed no financial issues on direct examination. On cross-examination, defendant stated that he pays rent of $800 per month. The remainder of cross-examination dealt with parenting time issues.

The only documents moved into evidence at the trial were the parties' tax returns for 2003 through 2005; plaintiff's CIS; the appraisal of the marital residence; a mortgage statement; the parties' pendente lite order; and three credit card bills.

The trial judge issued a written decision on January 26, 2007. The judge found that the parties "acquired substantial real and personal property during the marriage, including a home in Bloomfield, N.J.[,] furniture and furnishings, in addition to pensions and retirement plans." As noted, the parties stipulated at the outset of trial that the only assets were the marital residence and defendant's pension. There was no evidence of any other "retirement plans[,]" or "substantial real [or] personal property" or any "furniture and furnishings[.]"

The judge further found: "Together the parties enjoyed a middle class lifestyle, despite problems in the marriage that began shortly after the marriage." However, as noted, the trial record is devoid of any evidence as to the parties' marital lifestyle. The judge made no appraisal of the marital lifestyle based on plaintiff's CIS.

Regarding plaintiff's income, the judge found:

Plaintiff's [CIS] showed a net income of $11,000 for the year 2005, while her 2005 tax return showed a net income of $14,746 "after considerable business expense[."] In 2004, Plaintiff reported a business income of $13,764.00, and in 2003, Plaintiff's income was only $768.00. However, the Court does not have to impute income to Plaintiff in order to determine the accuracy of her income. Plaintiff's income may be determined by her own testimony during trial. During Plaintiff's testimony, Plaintiff conceded that her income as reported in her [CIS] was erroneous. . . . Plaintiff acknowledged that in 2005 she earned $74,000 before taxes and between $55,000 and $60,000 after taxes. The Court accepts Plaintiff's figure of $74,000 as being the accurate amount of income earned in 2005, and deducting taxes of approximately $15,000, the Court finds that Plaintiff's after tax income for the year 2005 was $60,000.

The judge established child support for the two children "based upon [the] New Jersey Child Support Guidelines," at $292 per week. However, the judge did not attach a Child Support Guidelines worksheet to his order.

In addressing plaintiff's request for alimony, the judge found:

Plaintiff's gross income for 2006 was expected to be less than that of 2005, when she netted only $14,746, and Defendant's income was expected to be more than $112,000. Plaintiff's argument apparently being that Plaintiff could not maintain the standard of living enjoyed during the marriage on such a paltry income. [Emphasis added.]

Having previously characterized the parties' marital lifestyle as "middle class[,]" the judge noted that, "[a]fter Plaintiff testified, . . . there was no credible testimony concerning Plaintiff's standard of living or lifestyle." The court noted that plaintiff did not address whether she sought permanent or limited duration alimony.

The court acknowledged that it was required to address "all relevant factors" under N.J.S.A. 2A:34-23(b) in considering alimony, adding:

Plaintiff earned $74,000 before taxes in 2005 and will likely earn more in 2006. Plaintiff will also share equally in the substantial equity proceeds from the sale of the marital home. Plaintiff does not show a shortfall in her net monthly income vis a vis her reasonable expenses, even if those expenses are deemed inaccurate. Plaintiff conceded during her testimony that the information provided to the Court regarding her lifestyle, standard of living, expenses, and even her earnings and tax returns, were all inaccurate. However, from Plaintiff's testimony and from her CIS, it is clear that Plaintiff is capable of providing her own support and does not show a need for alimony.

Moreover, this was a marriage of only eight and one-half (8 1/2) years. Plaintiff is a self-employed real estate appraiser and works as an independent contractor for two appraisal companies. Plaintiff is only thirty-nine (39) years of age, and appears to be in good health, physically and psychologically. The parties have two children, ages 11 and 5, both of whom reside with plaintiff. Plaintiff has not altered her lifestyle because of the marriage, nor has her ability to work been impaired. Defendant is forty-five (45) years of age and employed by Waldorf Astoria Hotel. Defendant earned $112,000 last year, and he, too, is in good health.

While it would be impossible for the parties to truly maintain the status quo as to their now separate living arrangements, given their incomes of $74,000 and $112,000 and the potential for growth, and given the division of marital assets, it is reasonable to believe that the parties can maintain a reasonably comparable standard of living as that enjoyed during the marriage. Both parties have vocational skills and educational levels that cause them both to be employable for the foreseeable future. [Emphasis added.]

Based on this analysis, the court concluded that "an award of any type of alimony in this case would be inappropriate."

The judge did not address plaintiff's request for credits in equitable distribution for defendant's non-compliance with the pendente lite order to pay two-thirds of the monthly mortgage and child support of $490 per week. As noted previously, plaintiff had requested an audit to determine the amount of defendant's child support arrears; she also produced documentation showing that defendant's obligation on the mortgage was $11,906 under the pendente lite order. Moreover, the final judgment of divorce is silent as to the parties' respective obligations to contribute to the ongoing carrying costs pending the sale of the marital residence.

In her motion for a new trial, plaintiff took issue with the imputation to her of $74,000 gross annual income. She argued that "the calculations set forth in the Court's written opinion are inflated because they do not take into account [her] business expenses. There were no exhibits admitted into evidence to substantiate [her] business expenses in 2005 or 2006."

Plaintiff also certified that her CIS admitted into evidence at trial had been completed with her prior attorney and her trial attorney had "said it was not done correctly and needed to be fixed before we went to trial." However, counsel never prepared a corrected CIS and plaintiff, therefore, stated that she "went to trial with inaccurate figures." Plaintiff certified that she was not "even prepared to discuss [her] business expenses that day in Court because [she] was told by [counsel] that there wasn't going to be a trial. It wasn't until lunch that day that [she] learned that the trial was starting that afternoon."

Plaintiff certified that her business-related expenses totaled $28,650. Therefore, she argued, "the $60,000 net annual figure arrived at by the court is not correct."

Plaintiff also took issue with the trial judge's conclusion that she would be able to maintain "a reasonably comparable standard of living as that enjoyed during the marriage." First, plaintiff pointed out that the record contained no evidence to establish that lifestyle. In addition, plaintiff noted that she testified as to her need to use credit cards to meet expenses because she was not receiving support from defendant. Plaintiff stated that she "was never asked at trial whether [she] continued to maintain a lifestyle memorialized by th[e] budget" in her CIS. She contended: "It was not reasonable for the Court to assume without any testimony that I could and am maintaining a reasonably comparable standard of living to which I was accustomed during the marriage."

Plaintiff further pointed out that the judge's decision did not address the allocation of credit card debt. Nor did it address her request for counsel fees.

Defendant's certification in opposition to plaintiff's motion dealt primarily with parenting time issues. Defendant asserted that plaintiff was "well aware . . . that any monies that were past due will be paid out of the proceeds of the form[er] marital residence." However, notwithstanding defendant's statement to this effect, no part of the judge's decision ordered it.

Defendant also alluded to the fact that the trial judge failed to provide for post-judgment payment of the carrying costs on the marital residence pending its sale. Defendant stated: "Fortunately, the judgment of divorce does not hold me responsible for payment of the mortgage following the trial date."

In denying plaintiff's motion for a new trial, the judge stated:

The problem with the argument for alimony was because [of] the inaccuracies on her [CIS]. I mean, she'd sit right here . . . and testify that everything she said on the [CIS] was inaccurate. All of her expenses were inaccurate. The Court couldn't use any of that to determine her living style, nor could we use that to determine her income. She did testify to the income. . . .

And the Court did not consider her expenses, because that's not considered when it comes to arranging child support, or alimony. The expenses that she laid off were expenses for . . . her telephone. . . .

[S]he's self-employed. So, these business expenses . . . that the IRS may recognize, I'm not compelled to recognize as being legitimate expenses. Simply because the IRS recommends them, does not mean I should recommend -- that's income to her. Now, if she can write it off, fine. But that doesn't discount the fact that it's income. And, so, I didn't take that into consideration. I did not.

But I did consider all of that, and when I made the decision, I thought I was making a full, and fair decision . . . .

The trial judge entered an order on April 13, 2007, in conformance with his decision, denying plaintiff's motion for a new trial.

On appeal, plaintiff argues that she is entitled to a new trial on alimony, child support, equitable distribution and counsel fees; that she should not be "prejudiced as a result of the manner in which her case was presented"; and that she is entitled to relief under Rule 4:50-1(f).

Pursuant to Rule 4:49-1(a), a new trial "may be granted to all or any of the parties and as to all or part of the issues on motion made to the trial judge." The standard of review for such a motion is whether "it clearly and convincingly appears that there was a miscarriage of justice under the law." Ibid.

The trial judge's obligation on a motion for a new trial "is not a pro forma exercise, but calls for a high degree of conscientious effort and diligent scrutiny. The object is to correct clear error or mistake . . . ." Dolson v. Anastasia, 55 N.J. 2, 6 (1969). "Upon motion for a new trial the trial judge must weigh the evidence, and if it be so overwhelming on one side 'as to give rise to the inescapable conclusion of mistake, passion, prejudice, or partiality, it cannot serve to support the judgment.'" Franklin Discount Co. v. Ford, 27 N.J. 473, 490 (1958)(quoting Hager v. Weber, 7 N.J. 201, 210 (1951)). To obtain a new trial, a party must present "'trial error, attorney misconduct or some other indicia of bias, passion or prejudice, impacting on the [result].'" McRae v. St. Michael's Med. Ctr., 349 N.J. Super. 583, 596 (App. Div. 2002) (quoting Fertile v. St. Michael's Med. Ctr., 169 N.J. 481, 499 (2001)).

"The standard governing an appellate tribunal's review of a trial court's action on a new trial motion is essentially the same as that controlling the trial judge." Dolson, supra, 55 N.J. at 7. "[T]he duty remains to determine whether a miscarriage of justice occurred." Velop, Inc. v. Kaplan, 301 N.J. Super. 32, 48 (App. Div. 1997), certif. granted, 152 N.J. 9 (1997), appeal dismissed, 153 N.J. 45 (1998). Applying that standard, we conclude that "a miscarriage of justice occurred[,]" ibid., and a new trial is required in this matter.

The judge's trial decision contained numerous findings of fact that were either not supported by, or were inconsistent with, the evidence presented at trial.

Regarding alimony, the trial judge's analysis of plaintiff's income ignored her testimony as to various business expenses she paid out of her gross earnings, such as her car lease. The judge's estimation of her income tax obligation was not supported by any evidence. Despite finding that plaintiff's gross income for 2006 "was expected to be less than that of 2005," when addressing the statutory factors in N.J.S.A. 2A:34-23(b), the judge stated that plaintiff "will likely earn more in 2006" than she did in 2005. The judge also failed to make any findings with respect to the parties' marital lifestyle.

The trial judge noted that plaintiff had "conceded during her testimony" that her CIS and "even her earnings and tax returns, were all inaccurate." Nonetheless, the trial judge concluded: "[F]rom Plaintiff's testimony and from her CIS, it is clear that Plaintiff is capable of providing her own support and does not show a need for alimony." (Emphasis added). That conclusion is inconsistent with the judge's finding that plaintiff's income figures were "inaccurate"; it also lacks any evidentiary support. Moreover, the court failed to engage in any analysis of plaintiff's possible entitlement to limited duration alimony, as required by N.J.S.A. 2A:34-23(c). See CoX v. Cox, 335 N.J. Super. 465, 476-77 (App. Div. 2000). Furthermore, the record does not disclose how the judge calculated child support. Rule 5:6A provides: "A completed child support guidelines worksheet in the form prescribed in Appendix IX of these Rules shall be filed with any order or judgment that includes child support . . . ." Neither the judge's decision of January 26, 2007, nor the judgment of divorce filed on February 21, 2007, appends a child support guidelines worksheet. Nor does the judge explain the discrepancy between the $292 weekly child support amount in his decision and the $490 weekly amount established in the pendente lite order.

In addition, the judge failed to address issues such as (1) plaintiff's requests for credits against equitable distribution for defendant's non-compliance with his pendente lite obligations; and (2) the parties' respective obligations for carrying costs on the marital residence pending its sale.

In denying plaintiff's motion for a new trial, the judge stated, regarding alimony, that he did not consider plaintiff's business expenses "because that's not considered when it comes to arranging child support, or alimony." (Emphasis added). This is a misapplication of the law. The child support guidelines provide that certain "ordinary and necessary expenses . . . allowed by the IRS" as business deductions, are "[s]pecifically excluded . . . for the purpose of these guidelines[.]" Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-B to R. 5:6A at 2309 (2008). However, no comparable exclusions exist in alimony determinations. This analysis by the judge was clearly erroneous.

Based on the foregoing, we conclude the trial judge's decision of January 26, 2007 "clearly and convincingly" constitutes "a miscarriage of justice under the law." R. 4:49-1(a). Therefore, we reverse the order of April 13, 2007, and remand this matter for a new trial on the issues of alimony, child support, equitable distribution and counsel fees.

This decision renders moot plaintiff's argument, in the alternative, that she is entitled to relief under the so-called "catch-all terms" of Rule 4:50-1(f).

Reversed and remanded for further proceedings in conformity with this opinion.

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