October 9, 2008
ELIZABETH F. ANDERSON, F/K/A ELIZABETH LUDEKING, PLAINTIFF-RESPONDENT,
STEVEN G. LUDEKING, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-2063-01-C.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 11, 2008
Before Judges Winkelstein and Gilroy.
Defendant Steven G. Ludeking appeals from the August 8, 2007 order of the Family Part. We affirm.
Plaintiff Elizabeth F. Anderson, f/k/a Elizabeth Ludeking, and defendant were married on September 21, 1991, and divorced on March 7, 2002. One child was born of the marriage, a daughter, born in November 1994. On January 29, 2002, the parties entered into a Property Settlement Agreement (PSA), resolving issues of alimony, custody, child support, and equitable distribution. At the time the PSA was executed, defendant was employed by Deterrent Technologies, Inc. (Deterrent), where, in addition to receiving a salary, he held a 15% ownership interest in the company. Plaintiff was not employed during the marriage, having chosen to remain at home to raise their daughter.
Paragraphs 2 through 9 of the PSA addressed alimony. Under Paragraphs 2, 3, and 7, defendant agreed to pay plaintiff limited duration alimony in the amount of $50,000 per year, or $4,166 per month, commencing February 15, 2002, and ending December 31, 2011. Paragraph 4 provided that defendant could file an application to modify his alimony obligation in the event he suffered a "substantial change in circumstances." The same paragraph, however, prohibited plaintiff from seeking an increase in alimony "no matter what the financial situation of the parties is or may become."
Paragraph 3 provided that defendant's alimony obligation would terminate on plaintiff's remarriage. Paragraph 5 prohibited defendant from seeking a reduction in his alimony obligation based on plaintiff's future employment, unless her earnings exceeded $25,000 per year.
Paragraphs 9, 10, and 11 of the PSA addressed defendant's child support obligation. Under Paragraph 9, defendant agreed to pay plaintiff child support in the amount of $75,000 per year, payable $6,250 per month, commencing February 1, 2002, "so long as alimony is an obligation of the [defendant], pursuant to Paragraph 10 below." Paragraph 10 provided:
[a]t the time that alimony terminates, whether by [plaintiff's] remarriage or otherwise, then child support shall be reduced to the sum of $3,000 per month, for a total of $36,000 per year. However, if alimony continues for the full 10[-]year period, it will then terminate, however child support will remain at $75,000 [a year] for the next two years [and] then reduce to $36,000 [a year].
Paragraph 11 addressed modification of defendant's child support obligation: "[defendant] agrees not to make any application for the reduction in child support at any time during the child's unemancipation, other than as set forth above with respect to the payment of alimony."
In addition, other provisions of the PSA provided that defendant would be responsible for the cost of his daughter's college education and would pay for her medical insurance coverage and all uncovered medical and/or dental expenses, as long as no expense exceeded $250 for any one condition, illness, or disease without plaintiff first consulting defendant.
Lastly, Paragraph 38 addressed plaintiff's waiver of her claim to defendant's interest in Deterrent: "[i]n consideration for the other provisions of this Agreement and the other provisions regarding equitable distribution, [plaintiff] hereby waives any and all interests that she has or may have in and to the fifteen (15%) [percent] ownership that [defendant] has in Deterrent Technologies, Inc."
In 2006, plaintiff remarried. Accordingly, defendant's alimony obligation terminated, and his child support obligation was reduced from $75,000 a year to $36,000 a year, resulting in a reduction in his support obligations by $89,000 a year. In March 2007, defendant was involuntarily discharged from employment with Deterrent, but still retained his 15% ownership interest in the company. Commencing April 23, 2007, defendant obtained new employment as Vice President of Sales for Structure Works, Inc., earning $150,000 per year plus commission based on the company's profitability. In addition, plaintiff received a 10% ownership interest in the company.
On June 14, 2007, defendant filed a motion seeking to: 1) reduce his child support obligation "from that established by the [PSA], by reason of [his] change in economic circumstances, the passage of time, and the modifications of the Court's Child Support Guidelines;" 2) fix and determine the parties' economic obligation to support their daughter, including the parties' obligations to contribute toward her future college costs; 3) fix and determine plaintiff's earning capacity; 4) fix a schedule for discovery; 5) establish a time-sharing schedule for defendant with the parties' daughter; and 6) an award of counsel fees and costs.
Plaintiff opposed the motion and cross-moved for an order requesting defendant pay for their daughter's orthodontic expenses; requiring defendant to exercise visitation with their daughter at reasonable times with no Friday overnights; and seeking counsel fees and costs. On August 7, 2007, although both parties requested oral argument on their respective motions, the trial court decided the motions on the papers. The court: 1) granted defendant's request to enforce his parenting time as defined in the memorandum of understanding attached to the PSA; 2) denied defendant's requests to reduce his child support obligation and to modify the terms of his visitation schedule; 3) denied plaintiff's request to modify the terms of the parties' parenting arrangements and for reimbursement of their daughter's orthodontic expenses; and 4) denied both parties' requests for counsel fees. A confirming order was entered the following day.
Defendant first argues that "the denial of oral argument constituted a gross abuse of discretion and deprivation of due process under the circumstances." Defendant asserts that he was entitled to oral argument on his motion, citing Rules 1:6-2(d) and 5:5-4(a). We disagree.
Generally, oral argument on motions is governed by Rule 1:6-2(d). For motions in the Family Part, that rule is cross-referenced to Rule 5:5-4(a), which provides in relevant part: "except that, in exercising its discretion as to the mode and scheduling of disposition of motions, the court shall ordinarily grant requests for oral argument on substantive and non-routine discovery motions and ordinarily deny requests for oral argument on calendar and routine discovery motions." (emphasis added).
Although Rule 5:5-4(a) has been interpreted as creating "a strong presumption favoring argument on motions other than calendar matters and routine discovery applications", Pressler, Current N.J. Court Rules, comment 1.1 on R. 5:5-4 (2009), the decision whether to grant or deny oral argument on motions remains discretionary with the trial court. R. 5:5-4(a). Accordingly, oral argument is not required, even on "motions which by their nature require evidentiary hearings for disposition . . . [where] there is no dispute as to any material fact." Pressler, Current N.J. Court Rules, comment 1.1 on R. 5:5-4 (2009); see also Fusco v. Fusco, 186 N.J. Super. 321, 328-29 (App. Div. 1982) (determining that the scope of the two predecessor rules, R. 1:6-2(b) and R. 4:79-11, extended only to Family Part motions appropriately decided without the need for further evidence: "[c]onsequently, all that is intended by those rules is to give the trial judge the option of dispensing with oral argument, subject to the presumptions of [R. 5:5-4(a),] when no evidence beyond the motion papers themselves and whatever else is already in the record is necessary to a decision.").
Here, defendant requested oral argument on a motion addressing issues other than the court's calendar or a routine discovery matter. As such, defendant would generally be entitled to oral argument. R. 5:5-4(a). However, we are satisfied from our review of the record and upon considering the parties' oral arguments before the court, that oral argument in the trial court was not required because the record contained all of the evidence necessary for the court to properly decide the motions, and none of the evidence raised a genuine dispute as to any material facts.
The record contained copies of: the judgment of divorce; the PSA, together with all of its attachments; the parties' certifications; the parties' current Case Information Statements; copies of the parties' joint federal tax returns for the years 1999, 2000, and 2001; defendant's individual tax returns for years 2002 through 2005, inclusive; plaintiff's individual tax returns for the years 2004 and 2005; a copy of defendant's December 22, 2006 paystub from Deterrent, setting forth defendant's earnings for that year; a copy of defendant's paystub from Deterrent dated March 16, 2007, verifying his last salary with that employer; a copy of a letter from defendant's current employer, Structure Works, Inc., dated April 24, 2007, verifying the terms of his employment, together with a paystub from that employer dated May 16, 2007, verifying his earnings; defendant's child support guideline worksheet; a copy of the New Jersey Occupational Employment Statistics Wage Survey for Ocean County, indicating average wages for hairdressers, hairstylists, and cosmetologists, a field in which plaintiff was employed prior to marriage; and a copy of a statement from their daughter's orthodontist for services rendered.
Because we are satisfied that the trial court had all of the information required to properly rule on defendant's motion, we do not find error in the court deciding the motion on the papers. Nonetheless, we add the following comment. Where a party requests oral argument on a substantive motion and the court denies the request, the court should place reasons on the record at the time of deciding the motion, or attach a written statement of reasons to the order confirming the court's decision explaining why the motion was decided without argument.
Defendant argues next that the trial court erred in determining that he had not established a prima facie showing that he was entitled to a reduction in his child support obligation, contending that his loss of employment with Deterrent in March 2007 resulted in a substantial reduction in income. Although we agree that defendant proved a change in circumstances, we disagree that he established a prima facie showing that he was entitled to a reduction in his child support obligation.
"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). Moreover, "[b]ecause of the family courts' special jurisdiction and expertise in family matters, appellate courts should accord deference to family court factfinding." Id. 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).
It is well established that child support orders are subject to review and modification upon a showing of "changed circumstances." Lepis v. Lepis, 83 N.J. 139, 146 (1980). "'[C]hanged circumstances' are not limited in scope to events that were unforeseeable" at the time of divorce and may include, among other things, maturation of the children, increased cost of living expenses, a change in the payor spouse's income, and subsequent illness or disability. W.S. v. X.Y., 290 N.J. Super. 534, 539 (App. Div. 1996); see also Chobot v. Chobot, 224 N.J. Super. 648, 653 (App. Div. 1988). The "guiding principle is the 'best interests of the [child].'" Lepis, supra, 83 N.J. at 157.
The party seeking modification has the burden of demonstrating a change in circumstances, warranting relief from the support obligation. Ibid. Because almost all matrimonial matters involve factual disputes of some nature, the moving party must demonstrate a prima facie change in circumstances warranting relief before a court is required to hold a plenary hearing on a motion to modify support obligations. Ibid.
Prima facie proof is evidence that, "if unrebutted, would sustain a judgment in the proponent's favor." Baures v. Lewis, 167 N.J. 91, 118 (2001).
Here, the motion record established that defendant suffered a substantial change in income after he was involuntarily discharged from his employment with Deterrent. For the three years immediately preceding the divorce, the parties' joint federal income tax returns disclosed defendant's wage earnings of $704,488 in 1999; $701,614 in 2000; and $450,256 in 2001. In the year of the divorce and for the three years following, the tax returns disclosed defendant's wage earnings of $675,287 in 2002; $356,000 in 2003; $307,331 in 2004; and $299,933 in 2005. Although the record did not contain a copy of defendant's 2006 tax return, defendant certified that his wage income from Deterrent was $306,000. Following discharge from employment with Deterrent, defendant gained new employment earning $150,000 annually, together with possible commissions based on the company's profitability. Although we are satisfied that defendant established a showing of changed circumstances caused by his involuntary discharge of employment from Deterrent, that is not the end of our analysis.
Defendant agreed under Paragraph 9 of the PSA to pay plaintiff child support in the amount of $75,000 per year, commencing February 1, 2002, "so long as alimony is an obligation of [defendant], pursuant to Paragraph 10". Paragraph 10 provided for a reduction in defendant's child support obligation to $36,000 per year "[a]t the time that alimony terminates, whether by [plaintiff's] remarriage or otherwise". Pursuant to Paragraph 11, defendant agreed "not to make any application for the reduction in child support at any time during the child's unemancipation, other than as set forth above with respect to the payment of alimony." Although defendant denies plaintiff's assertion that Paragraph 11 constituted a quid pro quo for her waiver of any claim to his ownership interest in Deterrent, we find the dispute non-material to the issues presented both to the trial court and on appeal. Defendant conceded that plaintiff "is correct that I agreed not to make application for the reduction of child support in Paragraph 11 of our [PSA]."
We construe Paragraph 11 as an anti-Lepis provision, that is, one "which seeks to preclude the exercise of [a court's] equitable responsibility to review and, if warranted, to modify support obligations in response to changed circumstances". Morris v. Morris, 263 N.J. Super. 237, 241 (App. Div. 1993). We determine from our review of the PSA that it is an integrated agreement, that is, no provision contained therein is meaningless or unenforceable. Savarese v. Corcoran, 311 N.J. Super. 240, 248 (Ch. Div. 1997).
Paragraph 38 specifically provides that plaintiff waived any and all interest that she might have had in defendant's ownership interest in Deterrent "[i]n consideration for the other provisions of this Agreement and the other provisions regarding equitable distribution". There is adequate consideration supporting defendant's forbearance to seek modification of his child support obligation as contained in Paragraph 11, i.e., except for the sole reason expressed in Paragraph 10 - a reduction to $36,000 per year on termination of his alimony obligation. We reject as meritless defendant's contention that the exception contained in Paragraph 11, "other than as set forth above with respect to the payment of alimony," refers back to Paragraph 4, rather than to Paragraph 10.
The inclusion of an anti-Lepis provision in a PSA requires a court to balance Lepis, which "permits later modification to the extent that changed circumstances render the agreed terms no longer 'fair and equitable,'" against the rights of parties to freely bargain support obligations in family matters. Morris, supra, 263 N.J. Super. at 241 (quoting Lepis, supra, 83 N.J. at 148-49). Generally, negotiated marital agreements "are approached with a predisposition in favor of their validity and enforceability." Massar v. Massar, 279 N.J. Super. 89, 93 (App. Div. 1995).
The court in Morris reconciled the tension between the two principles as addressed in the decisions of Smith v. Smith, 261 N.J. Super. 198, 199-200 (Ch. Div. 1992) (determining that anti-Lepis clauses were not enforceable as a matter of public policy because they precluded the exercise of a court's equitable jurisdiction) and Finckin v. Finckin, 240 N.J. Super. 204, 205 (Ch. Div. 1990) (determining that anti-Lepis clauses were enforceable). The Morris court agreed with both decisions in part. Morris, supra, 263 N.J. Super. at 241. In reconciling the two cases, the Morris court held that "[t]he usual 'fair and equitable' Lepis standard is still to be applied, but . . . the court must determine what is warranted under the prevailing circumstances. Such circumstances include plaintiff's agreement to accept and defendant's agreement to pay a fixed amount, regardless of changes in circumstances." Id. at 242. Accordingly, the court concluded "that modifications [to a negotiated support obligation] are permitted, but only where the failure to modify would be unreasonable or unjust." Id. at 243.
In denying defendant's motion for a reduction in his child support obligation, the trial court reasoned in pertinent part:
Lepis established an approach that courts must take when faced with a request for modification of child support or alimony. Where the parties have agreed on the amount of support or alimony, Lepis permits later modification to the extent that changed circumstances render the agreed terms no longer fair or equitable. The [parties'] property settlement agreement clearly contains an anti[-]Lepis provision in regard to the defendant's inability to seek a modification in child support.
As discussed by me earlier, the parties do not have the authority to bargain away the [c]court's equitable authority. As such, a [c]court retains the right and the ability to evaluate and potentially modify the terms of these [parties'] current child support obligation. However, in order for the defendant to succeed in his attempt to modify the support obligation, this defendant must establish not just a change in circumstances but that the current award is no longer fair and equitable.
The defendant's belief that he is simply entitled to a recalculation based upon the passage of time and his new employment is misplaced. Relying solely upon the defendant's own numbers as detailed in his current case information [statement], it is hard to classify the current order as being unfair or inequitable. The defendant claims $9,785 in total monthly expenses, including the child support. Extrapolated over 12 months, the defendant has yearly expenses of close to $117,400. That would leave at least $32,500 in additional yearly income or additional monthly income in the sum of $2,750 monthly.
Based on a review of the record and consideration of counsels' arguments, we conclude that the trial court correctly decided defendant's motion to modify his child support obligation. In addition, because we find an absence of any dispute of material fact relevant to the issues presented to the trial court, we determine that a plenary hearing was not required. We affirm substantially for the reasons expressed by the trial court. R. 2:11-3(e)(1)(A).
Defendant argues next that the trial court erred in failing to determine plaintiff's economic obligation to support the parties' daughter, including her obligation to contribute to the daughter's college costs. The argument is meritless. Plaintiff was not employed at any time during the marriage; has not worked post-divorce; and has remarried. Under the terms of the PSA, the parties agreed to the amount of child support without evaluating and considering plaintiff's possible future earnings or impartation of income. Because defendant failed to prove a prima facie showing that he is not able to continue his present child support obligation as agreed to in the PSA, we determine there was no cause for the court to have addressed defendant's request that plaintiff contribute toward her daughter's support or to have imputed income to plaintiff for that purpose. Moreover, defendant's obligation to pay for his daughter's college education is not imminent. The parties' daughter is only thirteen years old. If defendant is not able to pay for his daughter's college education at the time she enters college, defendant may reapply to the trial court for an order directing plaintiff to contribute towards her daughter's college education, if appropriate.
Lastly, defendant argues that the trial court failed to sufficiently articulate the reasons for denying his application for attorney's fees. Although we agree that the court should have more fully articulated the reasons for denying each party's request for counsel fees, we do not conclude that the omission requires reversal.
Fees in family actions are normally awarded to achieve parity between the spouses so as to level the litigation playing field. Anzalone v. Anzalole Bros., Inc., 185 N.J. Super. 481, 486-87 (App. Div. 1982); Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992). "With the addition of bad faith as a consideration [see N.J.S.A. 2A:34-23], it is also apparent that fees may be used to prevent a maliciously motivated party from inflicting economic damage on an opposing party by forcing expenditures for counsel fees." Kelly, supra, 262 N.J. Super. at 307.
To determine an appropriate fee award in a matrimonial action, the court is required to consider the following factors:
(1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.
The decision to award counsel fees is discretionary, Williams v. Williams, 59 N.J. 229, 233 (1971), and the ability to pay fees incurred by the other party and the need of the other party are paramount considerations. Pullen v. Pullen, 365 N.J. Super. 623, 629 (Ch. Div. 2003).
Here, the trial court denied both parties' requests for an award of attorney's fees, having satisfied itself "under a Williams analysis, that there [was] no basis for a transference of counsel fees." We have considered defendant's argument pertaining to the denial of his request for a counsel fee award against the above principles and have determined that the court properly denied the request. We find no abuse of discretion. The overriding factor is that each party has the ability to pay his or her own counsel fees, and there was no showing that either party prosecuted or contested the motions in bad faith.
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