January 13, 2009
ERIK J. SILVER, PLAINTIFF-APPELLANT,
PATRICIA B. SILVER, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-398-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 9, 2008
Before Judges Parker and Yannotti.
Plaintiff Erik Silver appeals from orders entered by the Family Part on October 31, 2007, which denied his motion to modify his alimony and child support obligations under the parties' property settlement agreement (PSA), and required plaintiff to pay all outstanding alimony arrearages within thirty days. Plaintiff also appeals from an order entered on February 13, 2008, which provided, among other things, that plaintiff's alimony and child support obligations under the PSA would remain in effect until December 2, 2007, but temporarily modified those obligations effective on December 3, 2007. For the reasons stated herein, we affirm in part and reverse in part.
The following facts are relevant to this appeal. The parties were married on June 25, 1994, and two children were born of the marriage. The marriage was dissolved by a dual final judgment of divorce dated November 8, 2006, which incorporated the parties' PSA dated November 6, 2006.
The PSA provided that plaintiff would pay defendant limited duration alimony for ten years, commencing on November 1, 2006, in the amount of $175,000 per year, to be paid at a monthly rate of $14,583. Plaintiff was also required to maintain health insurance coverage for defendant for a period of three years.
According to the PSA, plaintiff made an advance payment of alimony to defendant in the amount of $75,000. The agreement provided that defendant would repay the advance at a rate of $1,250 per month for sixty months, and plaintiff was permitted to deduct the repayments from his monthly alimony payments.
Thus, under the terms of the PSA, plaintiff's monthly spousal support obligation was $14,583, less the $1,250 repayment for the advance and $149.64, which was defendant's share of the health insurance payment, for a total of $13,183.36.
The PSA further provided that plaintiff would pay child support in the amount of $4,167 per month. Therefore, plaintiff's total monthly obligation for spousal and child support under the PSA totaled $17,350.36. Paragraph 9 of the PSA stated:
The parties acknowledge that the Alimony and Child Support that the Husband has agreed to pay hereunder is based upon the Husband's average gross yearly earnings for the period of 2004 through 2006 of $550,000 with C-Bass and his 2006 earnings of approximately $980,000. Any loss of employment by the Husband or reduction in income will entitle the Husband to seek a modification of his Alimony and Child Support obligation[s].
In May 2007, plaintiff's attorney informed defendant that, because plaintiff was experiencing financial difficulties, he would only be paying $6,000 per month for June and July 2007 but would make up the difference late in July after receiving a bonus. On July 31, 2007, plaintiff's attorney advised defendant that plaintiff's employer was considering filing for bankruptcy and, if this occurred, plaintiff may no longer be able to meet his alimony obligations to defendant.
In August 2007, defendant filed a motion in aid of litigant's rights. In her motion, defendant sought, among other things, an order requiring: plaintiff to pay all of the arrearages within thirty days; garnishment of plaintiff's wages for the child support and alimony payments; that plaintiff post a bond in the amount of not less than $1 million to ensure payment of his financial obligations; and an increase in plaintiff's child support obligation. Plaintiff's alimony arrearages for June, July, and August 2007 were $39,550.08. Plaintiff opposed the motion and filed a cross-motion seeking a reduction of his alimony obligations.
On October 31, 2007, the court granted defendant's motion in part and denied plaintiff's motion in its entirety. The court filed a statement setting forth the reasons for its determinations.
The court noted that, under Lepis v. Lepis, 83 N.J. 139, 147 (1980), the party seeking a change in the party's alimony or child support obligations has the burden of showing changed circumstances. The court observed that defendant had not provided evidence indicating that the cost of supporting the children had increased. Therefore, the court found that defendant failed to show a change of circumstances that would justify an increase in child support.
The court additionally found that plaintiff had not shown changed circumstances that warranted a modification of his financial obligations under the PSA. The court stated:
[p]laintiff asserts that the [recent] subprime mortgage crisis has resulted in a substantial reduction of his income but fails to provide substantive evidence that he has personally been affected by this event. The parties agree that the majority of plaintiff's income was a result of his annual bonus which he normally received in late July or early August. Plaintiff asserts that the substantial change in his circumstances is that his employer informed the employees that a bonus will not be paid this year, but he fails to provide any proof that supports his [statement]. Plaintiff provides a copy of his current case information statement ("CIS"), which does not significantly differ from his CIS at the time alimony and child support were set.
The court entered orders on October 31, 2007, which memorialized its decisions on the motions. The orders required that plaintiff pay the outstanding alimony and child support arrearages within thirty days; provide defendant with proof of the balance on hand and the contributions towards the college funds for the parties' children; and ensure that all checks provided to defendant are correctly addressed and made payable to "Patricia B. Silver." The court denied all of the other relief requested by the parties.
On November 26, 2007, defendant sought the issuance of an order requiring plaintiff to show cause why he should not be held in contempt for failing to pay the arrearages as ordered by the court. The court decided to treat the request as a notice of motion. Defendant thereafter filed a supplemental motion to hold plaintiff in contempt and to require plaintiff to pay a share of certain work-related child-care expenses. Plaintiff opposed the motions and on December 3, 2007, filed a cross-motion for reconsideration of the court's October 31, 2007 orders.
In a certification submitted in support of his cross-motion, plaintiff asserted that modification of his financial obligations under the PSA was warranted because he lost his job on October 26, 2007. Plaintiff stated that, for the fiscal year ending on June 30, 2007, his base salary was approximately $190,000. Plaintiff did not receive a bonus at the end of the fiscal year. He stated that his last paycheck was $8,125, before deductions for taxes, medical insurance for defendant and the children, and certain other costs. Plaintiff's employer provided plaintiff with a severance package that continued his regular base salary through April 11, 2008.
Plaintiff asserted that it was "a practical impossibility" for him to meet his financial obligations under the PSA. He stated that he had depleted his savings in the fiscal year from July 1, 2006 through June 30, 2007, in order to meet his financial obligations to defendant and the children. Plaintiff had expected that his yearly bonus would be paid at the end of the fiscal year and he could then make himself "whole." He said that by July 2007 it was clear "that the bonus would not be forthcoming."
Plaintiff noted that, under the PSA, he had a right to seek modification of his child support and alimony obligations due to the reduction in his income. He sought a reduction of his total support obligation to $55,000 per year, with monthly credits of $1,250 for the advanced payment of alimony, the $428 required to maintain defendant's health insurance, and the $350 premium plaintiff is compelled to pay to maintain a life insurance policy.
In addition, plaintiff stated that, under the PSA, he had been required to pay 29% of his average "compensation package" over "the last three years" as alimony and child support. Plaintiff therefore asserted that in 2007, he should only have paid defendant 29% of the $190,000 he earned in that year, or $55,100. Based on this analysis, plaintiff claimed that he overpaid defendant $214,900. For this reason, he asked the court to reconsider and eliminate the arrearages that he had been ordered to pay. Alternatively, plaintiff requested that the court suspend enforcement of the arrearages because he did not have the ability to pay those amounts.
Plaintiff also asked the court to modify the provisions of the PSA which required that he maintain life insurance coverage providing benefits of $1.5 million for defendant and $1 million for the children. Plaintiff stated that he could not afford to pay the premiums for this level of coverage. He requested that the court modify the PSA so that he would only be required to maintain coverage that provided benefits of $250,000 for defendant and $250,000 for the children.
On February 13, 2008, the court granted in part and denied in part the relief sought by the parties. The court explained its decisions on the motions in a written statement of reasons.
The court found that, although plaintiff's motions were deficient, relief from his alimony and child support obligations was warranted under the circumstances. The court wrote:
[a]t the time he filed his motion for "reconsideration," plaintiff had been unemployed for less than one month. He offered no proof in his initial certification of his efforts to secure a new job. He did not even file a [CIS], not to mention a copy of his [CIS] that was current at the time of the settlement. As a matter of law, plaintiff's application should be denied. However, to do so would ignore the reality of the situation. Defendant does not deny that plaintiff has lost his job and that he received no bonus in July 2007, a bonus that the parties anticipated would be paid when they settled their case seven months earlier. Instead, defendant argues that plaintiff should have told her sooner about the financial problems that they faced. For his part, plaintiff contends that defendant spends too much money.
For purposes of the present applications, the court views the situation as a short-term problem, one that must be addressed. Plaintiff's support obligations under the PSA remain in effect through December 2, 2007, the day before he filed his motion for "reconsideration." He shall pay arrearages due through that date within 30 days [of February 13, 2008]. The court acknowledges that plaintiff may have to borrow money to make that payment but it would be inequitable to modify his support obligation as of an earlier date. First, defendant relied on support in the PSA amount and has many past-due bills to pay.
Second, plaintiff's cross motion to modify support and his motion for "reconsideration" were deficient.
The court reduced plaintiff's alimony obligation from $14,583 per month to $4,166 per month. The court also reduced plaintiff's child support obligation from $4,167 per month to $1,849 per month, based on plaintiff's annual income of $190,000 and defendant's annual income of $38,500.
The court additionally required defendant to pay the first $250 of unreimbursed medical expenses per child per year, with the remaining costs shared by the parties by a ratio of 79% for plaintiff and 21% for defendant. Plaintiff also was required to pay 79% of certain work-related child-care expenses incurred by defendant. In addition, the court required plaintiff to continue to pay the cost of maintaining medical insurance for the children. The court emphasized that all of the relief granted to plaintiff was temporary. The court required the parties to file fully completed CISs by August 1, 2008.
The court filed an order dated February 13, 2008, which memorialized its determinations. This appeal followed. Plaintiff raises the following arguments for our consideration:
THE TRIAL COURT ERRED WHEN IT FAILED TO MODIFY PLAINTIFF-APPELLANT'S TOTAL SUPPORT OBLIGATION IN ACCORDANCE WITH THE TERMS OF THE PROPERTY SETTLEMENT AGREEMENT
THE TRIAL COURT FAILED TO CONSIDER THE PLAINTIFF-APPELLANT'S ARGUMENT THAT THE SUPPORT OBLIGATION SHOULD BE REDUCED IN ACCORDANCE WITH THE PERCENTAGE REDUCTION TO HIS TOTAL GROSS INCOME AS SET FORTH IN THE PROPERTY SETTLEMENT AGREEMENT
A. THE TRIAL COURT FAILED TO CONSIDER THE PLAINTIFF-APPELLANT'S ARGUMENT THAT HE OVERPAID ALIMONY AND CHILD SUPPORT BASED UPON THE ADVANCE PAYMENTS MADE AND THE PERCENTAGE REDUCTION OF HIS TOTAL COMPENSATION AS OUTLINED IN THE PROPERTY SETTLEMENT AGREEMENT
B. THE TRIAL COURT FAILED TO PROVIDE REASONING FOR THE AMOUNT AND DATE OF THE MODIFICATION OF ALIMONY AND CHILD SUPPORT WITHIN ITS ORDER OF FEBRUARY 13, 2008
THE TRIAL COURT FAILED TO INCLUDE ALIMONY AS AWARDED IN ITS ORDER OF FEBRUARY 13, 2008 WHEN RECALCULATING CHILD SUPPORT IN ACCORDANCE WITH THE CHILD SUPPORT GUIDELINES
THE TRIAL COURT FAILED TO ADDRESS THE PLAINTIFF-APPELLANT'S ABILITY TO PAY WHEN SETTING A TIMEFRAME FOR PAYMENT OF ARREARS UNDER ITS ORDERS
We have carefully considered the record in light of the arguments raised by plaintiff. We are satisfied that, with the exception of his argument that the court erred in the calculation of child support and the percentages that plaintiff must pay for the children's unreimbursed medical expenses and child-care costs, plaintiff's contentions are entirely without merit. R. 2:11-3(e)(1)(A) and (E).
We therefore affirm the orders of October 31, 2007 substantially for the reasons stated by the court in the statement of reasons filed with those orders. However, we reverse the provisions of the February 13, 2008 order which temporarily established child support in the amount of $1,849, and established the percentage of unreimbursed medical expenses and child-care expenses that plaintiff must pay, and remand for recalculation of those amounts. In all other respects, we affirm the order of February 13, 2008 substantially for the reasons set forth in the statement of reasons filed with that order. We add the following comments.
Here, the trial court temporarily modified plaintiff's child support obligation effective December 3, 2007. The court calculated child support in accordance with the Child Support Guidelines. R. 5:6A; Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A (2008). The court temporarily established child support in the amount of $1,849, based on plaintiff's annual income of $190,000 and defendant's annual income of $38,500.
The guidelines worksheet appended to the court's order states that defendant's annual gross taxable income was $740 per week and plaintiff's was $3,654 per week. After deducting federal, state and local taxes, the court determined each party's percentages of the total net income. Plaintiff's percentage was determined to be 79.17% and defendant's 20.83%.
Those percentages were used to calculate the parties' respective shares of the monthly amount of child support, which was determined to be $543. The percentages were also applied by the court when it ordered plaintiff to pay a 79% share of the children's unreimbursed medical expenses that exceed $250 per child and the work-related child-care costs incurred by defendant.
The court erred, however, by calculating plaintiff's share of total income without taking into consideration plaintiff's alimony payments. See Pressler, supra, Appendix IX-B to R. 5:6A, at 2342. The court also erred by failing to give plaintiff credit for the amounts he is required to pay to maintain the children's health insurance. Id. at 2354. Thus, plaintiff's child support obligation was not calculated correctly, and the percentages used to determine plaintiff's share of the unreimbursed medical expenses and child-care costs are erroneous.
Defendant argues, however, that plaintiff should not be given any credit for "alimony paid" because between August 14, 2007 and February 13, 2008, he did not pay "one single dime of alimony." We disagree. Plaintiff may not have paid the arrearages but he remains obligated to do so. Indeed, in its orders of October 31, 2007 and February 13, 2008, the court ordered payment of the arrearages.
For these reasons, we reverse those provisions of the February 13, 2008 order specifying the amount of child support that plaintiff is required to pay, as well as the percentages that plaintiff must pay for the children's unreimbursed medical expenses and work-related child-care costs. We remand the matter to the trial court for recalculation of those amounts.
Affirmed in part, reversed in part, and remanded for recalculation of plaintiff's obligation of child support, unreimbursed medical expenses for the children, and child-care costs in conformity with this opinion. We do not retain jurisdiction.
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