November 5, 2008
REESA PESCE, PLAINTIFF-RESPONDENT,
JOHN PESCE, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1774-03C.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 6, 2008
Before Judges Lisa and Alvarez.
Defendant, John Pesce, appeals from the denial of his post-judgment motion to reduce his alimony obligation. He also appeals from the denial of his reconsideration motion and denial of his request for discovery and a plenary hearing. In denying a reduction of alimony, Judge Coogan determined the amount of arrears and entered an order allowing defendant to pay a reduced weekly amount pending appeal, subject to the posting of a bond, and subject to a provision that arrears would continue to accrue as a result of the reduced payments.
On appeal, defendant argues that the judge erred in failing to find changed circumstances based upon his medical condition and alleged reduced income to justify a reduction in alimony. Defendant further argues that, at the very least, he made a sufficient threshold showing to warrant discovery and a plenary hearing on the changed circumstances issue. Finally, defendant argues that if the matter is remanded and a plenary hearing is ordered, the stay entered by the trial court of his obligation to pay the full amount should remain in effect pending the final outcome.
We reject defendant's first two arguments and affirm. In light of that disposition, we need not address defendant's third argument.
The parties married in 1970. Two children were born of the marriage, both of whom were emancipated by the time the parties were divorced by a judgment entered on June 13, 2005. On that date, the parties entered into a property settlement agreement (PSA), which obligated defendant to pay plaintiff $1050 per week in alimony. The PSA contained a provision entitled "BASIC ASSUMPTIONS," which stated in its entirety:
In entering into this agreement, the parties have agreed that the wife has an earning capacity of approximately $15,000 per year and the husband has an earning capacity and/or income of $130,000 per year.
The judgment of divorce incorporated the alimony obligation from the PSA.
About a year later, in the late summer of 2006, defendant was diagnosed with a heart condition. On September 20, 2006, he filed a motion to reduce alimony and requested discovery and a plenary hearing with respect to his asserted changed circumstances. Defendant certified that his doctors told him he would be incapacitated for six to eight weeks after surgery from his condition, that even a successful surgery would result in diminished capacity, and that he would apply for disability benefits. Defendant attached documentation of his hospitalization dates in July and August 2006. He certified that he continued to work for his employer, who was also his brother, and that his annual salary was reduced to $60,000 because of his diminished capacity. According to defendant, he would most likely be unemployed without his brother's generosity.
Defendant submitted paychecks from August 2006 totaling $1500 weekly gross pay, a 2004 tax return showing $88,427 in total income, a 2005 tax return showing $76,361 in total income, and a record of his taxed social security and medicare earnings from 1966 to 2003. In his September 11, 2006 Case Information Statement, defendant stated that his total gross income in 2005 was $76,328 and that he would not longer receive commissions after his surgery.
While the motion was pending, defendant's attorney also filed a letter report from defendant's physician, Dr. Peter M. Scholz, dated October 6, 2006, which contains the only evidence in this record specifying defendant's diagnosis, his required surgical procedure, his recovery from that procedure and prognosis. In its entirety, Dr. Scholz's report stated:
Recently, Mr. John Pesce was seen by me in consultation for worsening mitral valve regurgitation on September 7, 2006. After reviewing all his records and reviewing his most recent echocardiogram, he was found to have severe mitral regurgitation secondary to bileaflet prolapse. There was a question of endocarditis and vegetation. After six weeks of antibiotics, he came to see me for further evaluation.
At the time, he related mild to moderate symptoms of fatigue and shortness of breath and decreased exercise tolerance. Because of the valvular disease and the enlarged left atrium, he underwent mitral valve repair on September 15, 2006. He has had a good initial recuperation and was seen by me today in the office for his first follow up visit. His early recuperation has so far been uneventful. As expected he is still fatigued and gets out of breath with moderate exercise. His native valve function is good on physical examination.
I believe he will make a full recovery. He will require three months of temporary disability prior to being able to return to part time gainful employment. At that time, he will have weight lifting restrictions of 15-20 pounds and after four months of uneventful recovery, he will be able to lift 50-100 pounds.
As part of his post-operative care, he will require three months of anticoagulation therapy with Comadin. For this time, it is advisable that he stay away from occupations that put him at a higher risk for cuts or fractures that could lead to serious bleeding.
Please do not hesitate to contact me if you require any additional information.
After plaintiff filed opposition and a cross-motion seeking enforcement of the divorce judgment and PSA and fixing defendant's alimony arrearages, defendant filed a reply certification. He included a letter from his brother Steven Pesce, president of Elizabeth Truck Center, Inc., dated November 21, 2006, addressed "To Whom It May Concern:"
Due to the length of John Pesce's absence, we have had to fill the position of foreman formerly held by him. However, when Mr. Pesce has fully recovered and is ready to return to work, we will place him in the first available position. His salary will be adjusted to reflect his new position.
At the motion hearing, defendant's attorney argued that defendant's health condition constituted a permanent change in circumstances. He argued that defendant's $469.33 weekly disability payments, his anticipated reduction in annual income from $130,000 to $60,000, his health, and the fact that plaintiff was now earning $25,000 ($10,000 above her assumed $15,000 earning capacity in the PSA) supported a finding of a permanent change in circumstances.
Judge Coogan rejected defendant's argument and determined that defendant failed to meet his burden of showing a substantial and permanent change in circumstances warranting alimony modification. The judge emphasized that defendant's own medical evidence, as set forth in Dr. Scholz's report, reflected only a short temporary disability period and confirmed that defendant's initial recuperation was uneventful and his valve function was good on physical examination. The judge therefore concluded that defendant's temporary medical condition did not warrant modification of alimony. The judge fixed defendant's alimony arrears at $9350 as of November 30, 2006 and ordered their payment within forty-five days. He also awarded plaintiff attorney's fees.
On December 22, 2006, defendant moved for reconsideration. He produced no new medical evidence. The judge found no basis for changing his earlier order, and he denied the motion. The judge fixed defendant's alimony arrears at $11,300 as of January 8, 2007.
On May 3, 2007, defendant filed this appeal. On the same day, he sought a stay from the trial court, which resulted in an order entered on June 1, 2007 requiring defendant to post a bond in the amount of $9350, representing the arrears as of November 30, 2006, and allowing defendant to continue paying $500 per week in alimony, with arrears on the difference between that amount and the weekly obligation of $1050 to continue to accrue during the pendency of the appeal.
Defendant argues that the trial judge erred in denying his application for a reduction in alimony. He relies on Lepis v. Lepis, 83 N.J. 139, 146 (1980), arguing that spousal support agreements are subject to modification at any time upon a showing of changed circumstances. He contends that his unforeseen medical condition caused a substantial reduction in his earnings, thus entitling him to a reduction.
Alimony obligations "are always subject to review and modification on a showing of 'changed circumstances.'" Id. at 146 (quoting Chalmers v. Chalmers, 65 N.J. 186, 192 (1974)). "Changed circumstances" includes such situations arising after the original divorce judgment as the supporting spouse's increase or decrease in income; illness, disability or infirmity; and the dependent spouse's subsequent employment. Id. at 151. However, any change must be permanent to support an alimony modification. Bonanno v. Bonanno, 4 N.J. 268, 275-76 (1950).
Although any substantial change in the supporting spouse's financial condition subsequent to the original alimony order may be relevant to satisfy the requirement of demonstrating changed circumstances, such a change will be found "[o]nly in very limited circumstances." Crews v. Crews, 164 N.J. 11, 30 (2000).
At first blush, it appears that defendant has furnished the ingredients that would typically result in a reduced obligation, namely his income was cut in half as a result of an unforeseen heart condition that required surgical intervention. However, a closer look at the record and the circumstances of the parties reveals otherwise.
First of all, defendant has produced no evidence that he was earning $130,000 per year. Indeed, when the PSA was negotiated in June 2005, defendant had only recently filed his 2004 tax return, reflecting income of $88,427. In 2005, he reported $76,631. The $130,000 figure was a statement only of an assumed earning capacity set forth in the PSA. Therefore, even assuming a reduction to $60,000 it was not a substantial reduction from defendant's actual income.*fn1
At least as importantly, any reduction in earning capacity (and likely in actual earnings) was only temporary. By defendant's own medical evidence, his surgery was successful, his recuperation uneventful, and a full recovery was expected.
His own physician anticipated only a brief period of temporary disability. There is no dispute as to this medical evidence.
We therefore find no error in Judge Coogan's conclusion that defendant failed to demonstrate a substantial and permanent change in his ability to pay alimony.
In denying a reduction of alimony, the judge also rejected defendant's request for discovery and a plenary hearing. Lepis established the procedures for considering a postjudgment motion for alimony modification.
The party seeking modification has the burden of showing such "changed circumstances" as would warrant relief from the support or maintenance provisions involved. A prima facie showing of changed circumstances must be made before a court will order discovery of an ex-spouse's financial status. When the movant is seeking modification of an alimony award, that party must demonstrate that changed circumstances have substantially impaired the ability to support himself or herself. [Lepis, supra, 83 N.J. at 157.]
Only after the moving spouse makes this prima facie showing of changed circumstances should the court consider the financial condition of the non-moving spouse. Ibid. After considering the financial status of both parties, the court determines whether to hold a hearing.
Although equity demands that spouses be afforded an opportunity to seek modification, the opportunity need not include a hearing when the material facts are not in genuine dispute. We therefore hold that a party must clearly demonstrate the existence of a genuine issue as to a material fact before a hearing is necessary. Without such a standard, courts would be obligated to hold hearings on every modification application. The application of the equitable principles we have outlined does not require elaborate procedures in every case. Courts should be free to exercise their discretion to prevent unnecessary duplication of proofs and arguments. The volume of postjudgment litigation provides additional, practical support for this approach.
In determining whether a material fact is in dispute, a court should rely on the supporting documents and affidavits of the parties. Conclusory allegations would, of course, be disregarded. Only statements to which a party could testify should be considered. Thus, if the sole dispute centered around the supporting spouse's earnings, the disclosure of income tax returns might render a hearing unnecessary. [Id. at 159 (citations omitted).]
Judge Coogan correctly determined that defendant failed to make a prima facie showing of a permanent change in circumstances. We find unpersuasive defendant's continued reference to his reduction in income. As we have stated, accepting defendant's evidence that his income was reduced to $60,000, that was not a drastic reduction, and, more importantly, defendant has provided no competent evidence that the reduction in his earnings or earning capacity is anything other than temporary.
The more important focus here is on the cause of any reduction in income, namely defendant's health. On that point, defendant's own medical evidence establishes that there will be no permanent incapacity, and only a relatively brief period of disability lasting several months. Judge Coogan's denial of defendant's original motion for alimony reduction was grounded on the judge's conclusion that defendant's health condition was not a permanent change. Defendant submitted no new medical evidence to the contrary with his reconsideration motion, thus resulting in denial of that motion as well.
The judge's findings are well supported by the record, and he did not mistakenly exercise his discretion in denying relief to defendant.