November 21, 2008
MARYANN BRADFORD, F/K/A MARYANN DUFFY, PLAINTIFF-RESPONDENT,
THOMAS A. DUFFY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division-Family Part, Monmouth County, Docket No. FM-13-59-02B.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 22, 2008
Before Judges Cuff, Fisher and Baxter.
In this appeal, we review two post-judgment orders. The first order, entered on December 22, 2006, granted defendant Thomas Duffy's motion to reduce his child support from its prior level of $238 per week, but reduced it by only $19, to the sum of $219 per week; defendant maintains this reduction is grossly inadequate. Defendant also challenges another portion of the same order that set July 1, 2006, as the effective date of the reduction, rather than January 25, 2006, the date on which he filed his motion.
As part of his appeal from the December 22, 2006 order, defendant also maintains that the judge erred by failing to insist that plaintiff, Mary Ann Bradford, produce a copy of her 2004 and 2005 joint federal income tax returns for an in-camera inspection. We agree and reverse that determination.
Because of our conclusion that the judge erred by not reviewing plaintiff's joint income tax returns, we vacate the December 22, 2006 order pending an in camera inspection. If the judge is satisfied after her in camera review of the tax returns, that plaintiff's income is the same as shown on plaintiff's Form 1099 and pay stubs, then the order of December 22, 2006 shall be reinstated. However, if the joint tax returns reveal an income different from that shown on the wage documents plaintiff provided earlier, or if the returns raise any other questions that the judge believes ought to be explored, the judge shall use plaintiff's revised income to recalculate child support under the Guidelines and modify the December 22, 2006 order accordingly.
The second order, entered on November 15, 2007, imposed a lis pendens against inherited real property defendant owns in Elizabeth, as an alternative to requiring him to obtain a life insurance policy. He maintains that a lis pendens is an improper method of securing his responsibility for payment of child support until his children attain majority. Because both parties have now agreed upon another method of accomplishing the same objective, we need not address defendant's contention regarding the impropriety of the lis pendens. We accordingly remand that order for the modification described later in this opinion.
The parties were married on September 22, 1990, and were granted a judgment of divorce (JOD) on April 10, 2002. Two children were born of the marriage, a son in 1992, and a daughter in 1995. The parties separated in September 2001 when defendant, while intoxicated, threatened the parties' son with a knife. Plaintiff sought and was granted a final domestic violence restraining order (FRO). As a result of that incident, defendant was charged with the crime of terroristic threats, to which he pled guilty on June 10, 2002. He was sentenced to a three-year term of probation.
In the summer of 2003, plaintiff filed a complaint alleging that defendant's repeated phone calls constituted a violation of the FRO. Because the calls in question were made during the weekday, an assistant prosecutor, in preparing that case for trial, issued a subpoena to defendant's employer, Conference Call Service, demanding that the company produce a record of telephone calls made by defendant on the company credit card. In August 2003, the company terminated defendant's employment.
Between February 2004 and March 2006, defendant filed ten separate motions for reduction of his child support obligation. All were denied. On January 25, 2006, he filed the motion to reduce child support that is the subject of this appeal. On March 3, 2006, the judge ruled that a plenary hearing was necessary to resolve the parties' conflicting factual contentions. She ordered limited discovery, and required plaintiff to supply her income tax returns for 2004 and 2005, as well as copies of her 2006 pay stubs. The plenary hearing, covering 531 transcript pages, occurred on seven dates between May 25 and December 21, 2006. The parties themselves were the only two witnesses.
At trial, defendant testified that his termination was unrelated to his use of a company credit card to call plaintiff, and he instead attributed his firing to a company-wide layoff of the sales staff. Defendant testified that after he was terminated from his employment at Conference Call Service, he sought employment through various head hunters and employment agencies, and posted his resume on-line. He maintained that a number of employers were on the verge of offering him a sales position, but when they ran a criminal history check and learned of his criminal conviction, they chose not to offer him employment.
After repeatedly being denied employment because of his criminal conviction, defendant decided in February 2004 to halt his efforts with employment agencies and instead "switch gears" and send his resumes to "blue collar" companies that he found through classified ads. During his testimony, defendant identified by name forty-five such companies to whom he applied in 2004 and 2005. He was unsuccessful in securing employment at any of these, due primarily to his criminal conviction. On cross-examination, he acknowledged that he had failed to list his criminal conviction on his employment applications because he did not believe that the crime of terroristic threats was a felony. He conceded that this inaccuracy on his employment applications might have contributed to not being offered employment.
Some time during 2005, frustrated by his inability to find employment, defendant refocused his job search by seeking work as a day laborer. According to his testimony, he went to an area where people seeking work as undocumented day laborers congregate so that potential employers can drive by and hire them. Defendant described the work as "mostly manual labor," adding this "wasn't what [he] went to college for."
Defendant insisted that no matter how hard he tried, he had been unable to secure day laborer positions at a salary greater than eight dollars per hour. He maintained that he was always paid in cash and that none of his employers ever issued him a Form 1099. Although in March 2006, before the plenary hearing began, defendant's attorney had assured the judge that defendant would produce his employers to attest to his salary of eight dollars per hour, when the hearing began, defendant reported that none of his employers were willing to testify. He insisted that his current income was only $20,000 per year. Even though defendant was paid in cash in 2004 and 2005, he filed income tax returns showing an income of $25,935 in 2004 and $20,000 in 2005. In contrast, he earned $72,600 in 1999, $63,400 in 2000, $70,606 in 2001, and $71,752 in 2002. In 2003, before he was terminated by Conference Call Service, he earned $47,585.
Defendant filed a bankruptcy petition on September 7, 2005, to discharge $60,000 of credit card debt, but dismissed the petition after learning from his bankruptcy attorney that the bankruptcy trustee would seek to recover from his friends and family the $60,000 defendant had allegedly repaid them from the proceeds he realized upon the sale of his condominium.
In particular, he explained that he owed his father $12,000, his mother $15,000, his grandmother $16,000 and a friend whom he refused to name, $17,000. He maintained that he used the proceeds from the sale to satisfy that $60,000 of debt as well as $12,000 in child support arrearages. He insisted that he consequently had no money left from the $82,000 that he realized from the sale of his condominium. On cross-examination, defendant conceded he had no canceled checks to corroborate his claim that he had repaid $60,000 of debt. He insisted he had repaid his parents and his friend in cash.
Defendant also admitted on cross-examination that he had no canceled check or any other document to support his claim that he pays $800 per month in rent or that the $12,000 he used to purchase a new car had been lent to him by his parents. He asserted that all of his financial transactions are accomplished in cash or by money order. Finally, although defendant recognized that a prior court order obligated him to maintain a $150,000 life insurance policy to fund his child support obligation in the event he were to die before his children reached the age of majority, he had allowed the life insurance to lapse because he was unable to afford the premium.
During the proceedings, the judge asked defendant why, if he had been working for the same masonry contractor for two months, he was paid only eight dollars per hour when others working for the same company were earning nearly twice that amount, fifteen dollars per hour. Defendant's only answer was that his employer had not trained him to do the more demanding work that would yield the higher salary.
During the hearing, the judge also asked defendant why he was not earning the average hourly wage reported in the New Jersey Department of Labor and Workforce Development (DOL) wage statistics for laborers in Ocean and Monmouth Counties: $19.25 an hour for masonry contractors helpers; $12.80 per hour for electricians helpers; $12.15 per hour for pipe layers, plumbers and steam fitters helpers; $10.55 per hour for building contractors helpers; and $14.00 per hour for "extraction [sic] workers." Addressing defendant, the judge said:
So, I have a really hard time believing that you're making $8 an hour in cash. It just doesn't make any sense.... [Y]ou're a reliable guy. You have proved yourself, time and time again in my courtroom, to be a very reliable person. You are always here when a matter is listed.... You are clearly articulate.
Now, you have a few people who recognize your good work and the fact that you are a reliable person.... They know, call Tom Duffy,... if he's looking for work, he'll be there for us.
Defendant responded to the judge's inquiry by explaining that when he asked for a raise to $10 per hour, his employer refused, commenting "I'll just get a Mexican, it's not a big deal." He elaborated, "I have no ability to change the people who pay me what they pay me. I can ask for it, but they can pay me or pay someone else. And I'm at their mercy right now." He continued, "I have no recourse whatsoever. I'm not in a union. They have all of the leverage.... I feel that I'm being used and taken advantage of."
Plaintiff testified that she earns $26,000 per year as the officer manager of her father's insurance agency. She produced pay stubs that supported such testimony, along with a Form 1099 for 2004 and 2005; however, she did not bring her 2004 and 2005 joint income tax returns because her new husband had prohibited her from revealing his personal financial information. After plaintiff explained that her new husband was "adamant that he does not want to be a part of this case" because "[he] has already had his own issues with [the] court system," the judge sought to reassure plaintiff that the in camera review would be "for [the judge's] eyes only." When plaintiff persisted, commenting that her husband viewed such turnover as "unreasonable and oppressive," the judge chose to reserve decision on the motion. Ultimately, the judge permitted plaintiff to withhold her tax returns.
At the conclusion of the hearing on December 21, 2006, the judge rendered an oral decision. She concluded that defendant's job termination was due to his own conduct, i.e. his employer decided to fire him after receiving subpoenas related to his violation of the FRO. Nevertheless, the judge was convinced that defendant provided sufficient evidence of changed circumstances because he no longer has the ability to earn his previous salary due to his criminal record. Relying on Kuron v. Hamilton, 331 N.J. Super. 561, 570-71 (App. Div. 2000), the judge chose not to hold defendant's criminal record against him as voluntary conduct. She expressed dissatisfaction, however, with the evidence that he provided concerning his actual income, finding that his "proofs here were inadequate at best." She observed that defendant presented no W-2 forms and offered no bank statements or testimony from his employers. The judge concluded that the amount defendant claimed to be making was less than someone of his qualifications should be earning. Consequently, she imputed to him income of $800 a week, based upon $20 per hour for 40 hours a week, for a total annual income of $41,600.
However, the judge chose not to make the new $219 per week child support obligation retroactive to the time that defendant filed his motion to reduce child support in January 2006 because she found that plaintiff had been paying more in work-related child care than was required in the JOD. Consequently, she ordered that the reduction would not become operative until June 30, 2006. Finally, the judge ordered defendant to obtain a life insurance policy in the amount of $150,000 by March 1, 2007. Defendant appealed.
Because defendant had not obtained life insurance by the March 1, 2007 deadline, plaintiff filed a motion on May 3, 2007, to enforce the order. In response, the judge extended the deadline to July 6, 2007. On that date, defendant filed a motion for limited remand, claiming that his medical condition was a change in circumstances that made him uninsurable. By order of September 24, 2007, we remanded to the trial court for fact-finding on that issue.
On remand, defendant argued that his poor health and multiple drivers' license suspensions made it impossible for him to obtain life insurance. Plaintiff responded by informing the judge that defendant had recently received a substantial inheritance from his grandmother in the form of real property in Elizabeth, which could be used to secure defendant's life insurance obligation.
In a written decision on November 15, 2007, the judge held that defendant's own conduct resulted in his inability to obtain life insurance. In order to provide security for the children in the absence of life insurance, she ordered a $150,000 lis pendens against defendant's inheritance, which included his grandmother's residence. Next, she held that "[o]nce the appeal has been finalized the plaintiff may return to this Court and seek to impose a lien against the property in the form of a mortgage or other encumbrance, so as to provide security for the defendant's on-going child support obligation."
On appeal, an order entered by the Family Part is entitled to considerable deference. Cesare v. Cesare, 154 N.J. 394, 411 (1998). "The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence. Deference is especially appropriate'when the evidence is largely testimonial and involves questions of credibility.'" Id. at 411-12 (internal citation omitted) (quoting In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997)). Moreover, "matrimonial courts possess special expertise in the field of domestic relations" and "because of the family courts' special jurisdiction and expertise in family matters, appellate courts should accord deference to family court factfinding." Id. at 412, 413.
The party seeking to modify child support bears the burden of setting forth a prima facie case of "changed circumstances." Dorfman v. Dorfman, 315 N.J. Super. 511, 515 (App. Div. 1998). Should the judge conclude that circumstances have changed, child support will be recalculated based upon "the full financial circumstances of each party." Ibid.
However, the Child Support Guidelines specify that "[i]f the court finds that either parent is, without just cause, voluntarily unemployed or underemployed, it shall impute income to that parent...." Child Support Guidelines (Guidelines), Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2324 (2009). The Guidelines state that the imputed income is to be based on the parent's employment history, occupational qualifications, educational background and "prevailing job opportunities in the region. The court may impute income based on... the average earnings for that occupation as reported by the New Jersey Department of Labor." Ibid.
When a party appeals a judge's decision to impute income, we will not disturb the result unless "the underlying findings are inconsistent with or unsupported by competent evidence." Storey v. Storey, 373 N.J. Super. 464, 474-475 (App. Div. 2004) (citation omitted). We review orders that result from such proceedings for an abuse of discretion in light "of the broad equitable powers of the Family Part to accomplish substantial justice." Weitzman v. Weitzman, 228 N.J. Super. 346, 358 (App. Div. 1988), certif. denied, 114 N.J. 505 (1989).
Defendant argues that the trial court erred by concluding that he is voluntarily earning less than he could. Because he was laid off from his job and cannot find comparable employment because of his criminal record, he contends that his reduced salary is not voluntary and imputing income to him is reversible error.
We conclude that the judge's decision to impute income to defendant was an appropriate exercise of discretion. Defendant bore the burden of demonstrating that circumstances have changed and, despite his best efforts, he has been unable to earn more. Tash v. Tash, 353 N.J. Super. 94, 99 (App. Div. 2002) (holding that "[t]he failure of the defendant to provide adequate financial information placed the hearing judge in a position where he had to examine the defendant's health and work abilities and realistically impute income.")
In this case, defendant provided no pay stubs or checking account records to support his contention that his annual income is limited to $20,000. While the lack of pay stubs is somewhat understandable in light of the type of work he does, the lack of checking account records is not. For a person who previously earned approximately $75,000 per year and regularly maintained a checking account to now operate on a cash-only basis strikes us as a questionable claim. In making a determination of credibility, the judge was entitled to be skeptical of defendant's assertions. See In re J.W.D., supra, 149 N.J. at 117.
Equally troubling is defendant's contention that the judge was required to, in effect, accept his claim--that the entire $82,000 he realized from the sale of his condominium is now gone--based only on his self-serving and unsupported testimony. Particularly in the absence of documentary proof, we have no cause to question the judge's rejection of defendant's assertions that he repaid a total of $60,000 to his family and a friend. Defendant's refusal to even name the "friend" to whom he repaid $17,000 is particularly troubling. Under these circumstances, and particularly in light of the DOL statistics, the judge was entitled to disbelieve defendant's testimony that--despite his best efforts--he was earning only $20,000 a year.
Consequently, the imputation of income to him, based on the factors in the Guidelines, was proper. Tash, supra, 353 N.J. Super. at 98-99. The judge should not have been forced to rely on defendant's testimony alone. As we observed in Storey, "the court's decision need not be reduced to an unreasonable choice between prior and present earnings." Storey, supra, 373 N.J. Super. at 473. Instead, "[i]mputation of income is a discretionary matter not capable of precise or exact determination but rather requiring a trial judge to realistically appraise capacity to earn and job availability." Id. at 474. Here, the judge's order was well within the discretion afforded her by Storey. See Id. at 474-75.
We likewise reject defendant's contention that the judge's findings of fact and conclusions of law concerning the imputation of income to him fail to satisfy the requirement of Rule 1:7-4 that judges provide reasons for their decisions. This argument lacks sufficient merit to warrant extended discussion in a written opinion. See R. 2:11-3(e)(1)(A) and (E). We add only the following comments. The amount of income to be imputed is the amount a party could have "earned with appropriate effort." Thomas v. Thomas, 248 N.J. Super. 33, 35 (Ch. Div. 1991). In determining the precise amount, a judge is entitled to rely on "prevailing wages from sources subject to judicial notice." Storey, supra, 373 N.J. Super. at 475. In this case, the judge used DOL statistics, an approached favored by the Guidelines themselves. Guidelines, supra, Appendix IX-A to R. 5:6A at 2324. As we held in Tash, although the imputation of defendant's income was inexact, "he must bear the blame." Tash, supra, 353 N.J. Super. at 99. The judge made a fair decision in light of the evidence before her and provided an explanation for her conclusion that amply satisfies the requirements of Rule 1:7-4.
We turn next to the judge's decision to desist from enforcing her earlier order that required plaintiff to produce her joint income tax returns from 2004 and 2005 for an in camera inspection. Such inspection would have involved a review--and potential disclosure--of only plaintiff's income, not her husband's. De Graaff v. De Graaff, 163 N.J. Super. 578, 583 (App. Div. 1978). Once defendant established a change of circumstances, plaintiff was required to submit her federal and state income tax returns. Guidelines, supra, Current N.J. Court Rules, Appendix IX-B to R. 5:6A at 2343. Both parents are required to submit complete financial information to the court, not just the movant. Zazzo v. Zazzo, 245 N.J. Super. 124, 128-29 (App. Div. 1990).
In holding otherwise, the judge relied on Rule 1:1-2 as a basis for relaxing the requirement that plaintiff produce her tax returns. Rule 1:1-2 is to be applied sparingly, and resort to that Rule should be avoided when adherence to the rules offers a solution to the problem at hand. Bender v. Adelson, 187 N.J. 411, 427 (2006). A tax return is a reliable indicator of a party's income and a court should ordinarily insist on its production. Isaacson v. Isaacson, 348 N.J. Super. 560, 585-86 (App. Div.), certif. denied, 174 N.J. 364 (2002). While we are not unsympathetic to the concerns plaintiff expressed, tax returns are not privileged and privacy concerns are customarily addressed by an in camera review, followed by a redaction. De Graaff, supra, 163 N.J. Super. at 583.
Therefore, we reverse the judge's determination that plaintiff should be excused from providing her joint 2004 and 2005 tax returns. We remand for the production of those returns for an in camera inspection. As we have discussed above, we vacate the order of December 22, 2006 pending the judge's in camera review of plaintiff's joint tax returns. On remand, if such review demonstrates that plaintiff's income is the same as was shown on the pay stubs and Form 1099's that she provided, the judge shall reinstate the order of December 22, 2006. If, however, such in camera inspection results in a change to plaintiff's income, the judge shall recalculate child support and modify the December 22, 2006 order accordingly.
We turn next to defendant's contention that the December 22, 2006 order, which set June 30, 2006 rather than January 25, 2006, as the effective date for the reduction of defendant's child support obligation, was error. Defendant contends that this was an abuse of discretion. He relies upon N.J.S.A. 2A:17-56.23a, which provides that "[n]o payment or installment of an order for child support... shall be retroactively modified by the court except with respect to the period during which there is a pending application for modification, but only from the date the notice of motion was mailed either directly or through the appropriate agent." Further, he argues that it is unfair to use plaintiff's additional child care payments as a rationale for the delayed effective date when plaintiff never requested that these expenses be included in the JOD.
Plaintiff correctly argues that courts have the equitable authority to compensate a parent retroactively for childcare expenses beyond those contained in the JOD. In Weitzman v. Weitzman, supra, we held that a parent who had incurred past medical and insurance expenses on behalf of the children, beyond what was contained in the JOD, could receive compensation, giving consideration to "whether plaintiff was dilatory in pursuing her remedy and whether and to what extent defendant was prejudiced thereby." 228 N.J. Super. at 359.
Here, although plaintiff did not submit a request for this relief, the judge was not persuaded that plaintiff was dilatory, stating "I'm not going to penalize her for not having come in and ask[ed] for additional child support." We agree with plaintiff that it was within the court's discretion to adjust the amount of back child support that defendant owed plaintiff in light of the financial burdens of each party. See Crews v. Crews, 164 N.J. 11, 24 (2000) ("Courts have the equitable power to establish alimony and support orders... after a judgment of divorce or maintenance, and to revise such orders as circumstances may require.")
Moreover, nothing in N.J.S.A. 2A:17-56.23a forbids the result reached here. The statute requires that child support modifications not be made retroactive beyond the date of a filing for modification. See Halliwell v. Halliwell, 326 N.J. Super. 442, 457-58 (App. Div. 1999). Nothing in the statutory language prevents a court from adjusting a retroactive modification to a date after the filing to compensate a parent for additional expenses. In Keegan v. Keegan, we examined the legislative history behind the statute and observed that "the purpose of the statute was to remedy the loopholes of interstate child support enforcement laws.... Nothing in the legislative history suggests that the law was enacted to protect'parents' from retroactive modifications increasing support obligations where equitable." 326 N.J. Super. 289, 294 (App. Div. 1999). Consequently, we conclude that the delayed effective date of June 30, 2006, was not an abuse of discretion.
Finally, defendant argues that the imposition of a lis pendens, as an alternative to his purchase of a life insurance policy, was error. We need not address his contentions in light of both parties' statements during appellate oral argument that they were agreeable to an alternative method of accomplishing the same objective, i.e. imposing a mortgage against defendant's inherited property in an amount equivalent to his future child support obligation, adjusted periodically. We remand for entry of an amended order so providing.
For the reasons set forth above, the order of December 22, 2006, is vacated. We reverse the decision concerning plaintiff's joint 2004 and 2005 tax returns and remand for an in camera inspection. The order of November 15, 2007, concerning the lis pendens is vacated and remanded for entry of an amended order requiring the imposition of a mortgage as an alternative to a life insurance policy. We do not retain jurisdiction.
Affirmed in part, reversed in part, and remanded.
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