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McDermott v. McDermott

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


February 20, 2009

JOHN V. MCDERMOTT, JR., PLAINTIFF-APPELLANT,
v.
MARY M. MCDERMOTT, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Sussex County, Docket No. FM-19-268-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 22, 2009

Before Judges Fisher, Baxter and King.

In this appeal, we review a judgment that dissolved a long term marriage and resolved, among other things, the parties' responsibility for certain alleged marital debts, the value of plaintiff John V. McDermott's law practice, and disputes regarding alimony and counsel fees. We remand for additional findings of fact and conclusions of law regarding plaintiff's allegations that the marital partnership received and was benefited by other loans from his sister than those specifically found by the judge, but we reject the remaining issues raised by plaintiff in his appeal.

The parties were married in 1973 while plaintiff was a student at Fordham Law School. Plaintiff was admitted to the New Jersey bar in 1975 and commenced a solo law practice in 1976. Defendant kept the books for the law practice and performed other secretarial tasks for her husband. She worked in this capacity without receiving direct compensation for her work throughout most of the marriage. The parties had five children, two of whom passed away during the course of the marriage.

The record reveals that, with a small down payment, the parties purchased a two-family home in 1972, where they continued to reside after their marriage in 1973, paying the mortgage mostly with rent generated by the other unit. In 1975, the parties purchased a new home in Vernon for approximately $40,000, selling their first home for a $22,000 gain. Ten years later, the parties sold their Vernon home for $126,000 and built their final marital residence in Frankford, which consisted of approximately 3000 square feet on twelve acres of land, with a large in-ground pool and a full basement. The Frankford home cost approximately $225,000 to build and, upon completion, was encumbered by a $200,000 mortgage. At the time of trial, the parties agreed that the home's value was $475,000.

In the early 1980s, the parties bought a lot in Vernon and began construction of a four-unit office complex, the Vernon Professional Center. They intended that one of the offices would be used for plaintiff's law practice, while the remaining space would be leased. During construction, however, plaintiff suffered a bout of depression that prevented his participation in the building's planning and construction. Defendant supervised the completion of the project during plaintiff's incapacitation.

Plaintiff's legal work provided the marital partnership's sole source of income until defendant began working outside of the law office in the late 1990s. Along with his practice, plaintiff also took a temporary full-time job with Foster Wheeler in 1996 for six months, and from 1997-2002 he performed appellate work for the Office of the Public Defender to supplement his income.

As mentioned, defendant worked without pay in plaintiff's law office from 1976 to 1997. She watched the children, and as the family grew, had her parents provide free child care.

Defendant also sought occasional part-time employment as a substitute teacher and a bank teller. Her earnings were deposited in the family's joint checking account. Defendant is now a tenured employee of Mendham Township Board of Education earning $56,100 per year, with a vested pension and benefits. If defendant were to retire at age 60 (she is now 57 years old), she would receive $714 per month from her pension.

Plaintiff's uncontroverted income from his law business was presented as follows:

YearGross IncomeNet Income 2006$203,450$80,832 2005191,72271,130 2004273,135151,962 2003359,357154,968 2002195,15742,246 2001175,33772,849 2000166,37371,612 1999147,24953,758 1998152,26874,530 199799,21927,712 1996142,25357,360 1995105,08132,267

The fluctuations in plaintiff's income can be explained partially by plaintiff's recurring trouble with depression and partially by economic circumstances in the marketplace. The highs of 2003 and 2004, in particular, were due to plaintiff's conclusion of a substantial sexual harassment/wrongful termination case; plaintiff considered these years to be exceptions to the norm, and the data supports that classification.

It was not disputed that during this long term marriage, plaintiff generated most of the income; however, it was also undisputed that defendant took care of the children, worked at plaintiff's office and other part-time jobs, assisted in their financial endeavors and eventually took a full-time job in a school district.

One of the more controversial issues litigated by the parties concerned the extent to which plaintiff received loans from Joann Reed, his sister. Defendant asserted at trial that the family experienced many periods of financial difficulty due to plaintiff's fluctuating income and overspending. As a result, at times taxes and mortgage loans went unpaid, and additional debt was incurred. At one point, to defendant's surprise, her wages with the school district were garnished due to an IRS judgment of which she was unaware.*fn1 Some of the negative ramifications of the financial hardship on the parties included a refinancing of their home in 1998 where plaintiff took $40,000 in equity out of the home, and a threat of foreclosure on the Vernon Professional Center in January 2000.

These and other problems sparked a series of loans from plaintiff's parents and Joann Reed. There was testimony at trial that Ms. Reed first lent $5000 in January 1995. Defendant claims she did not know of this loan and many of the other loans until trial. However, the record suggests that defendant had some greater awareness. For example, in 1995, defendant spoke with her husband's psychiatrist, and followed the psychiatrist's advice that she speak to her in-laws and request that they cease financial assistance because it encouraged the "chaos [plaintiff] created when he failed to take his prescribed medications." She claimed at trial that any money received from the in-laws after that point was without her consent or knowledge. In fact, defendant wrote a letter in October 1996 to plaintiff that clearly explained she would no longer stand for plaintiff's parent's intervention to "escape the consequences of [his] . . . actions." However, more loans followed, and Ms. Reed testified that she lent a total of $283,398.50, of which only $6300 was repaid. Documentation was provided with regard to a loan of $80,000 that was made in January 2000 to help prevent foreclosure on the office complex. Defendant alleged that she did not see any written documentation concerning this loan until Ms. Reed was deposed on July 20, 2006.

The marital partnership's economic turmoil apparently continued right up until trial. Despite the relatively high income levels attained by plaintiff in 2003 and 2004 resulting from a large contingency fee, which plaintiff allegedly did not disclose to defendant, plaintiff did not pay off overdue real estate taxes on the home or any of the alleged loans from his sister.

Eventually, defendant acceded to plaintiff's requests to refinance the marital home in November 2003, which permitted nearly $40,000 of back-taxes to be paid but also raised the principal amount of the mortgage on the home to $214,000. Less than one year later, without disclosure to defendant, plaintiff purchased real estate in Machiasport, Maine. Defendant only discovered the existence of this asset after plaintiff had filed for divorce, when she inadvertently opened mail that discussed the terms of a $450,000 construction loan on this property.

Plaintiff did not disclose this asset in his complaint or during discovery.*fn2

What defendant has alluded to as plaintiff's secretive financial activities continued into 2005 when he negotiated with the Township of Vernon regarding the office complex. These negotiations contemplated the township's taking of an easement and the possible creation of a second lot. In fact, on December 5, 2005, plaintiff signed a license to install a new septic system and made an offer to the township regarding its acquisition of the property. The township was allegedly never informed that defendant was a co-owner of the property.

Upon the conclusion of a fifteen-day trial, the trial judge rendered a written decision, which, as is relevant to this appeal, (1) obligated defendant to repay Joann Reed the amount of $57,165.31 as her share of the loans made to the marital partnership; (2) valued plaintiff's law practice at $100,000 of which defendant was entitled to half in equitable distribution; (3) compelled plaintiff to pay defendant $2000 per month in limited duration alimony that would terminate after six years; and (4) ordered plaintiff to pay $49,000 of the $80,202.79 counsel fee incurred by defendant in this divorce litigation.

Plaintiff appealed, raising the following arguments for our consideration:

I. THE ASSIGNMENT OF RESPONSIBILITY TO DEFENDANT FOR ONLY 18% OF THE LOANS RECEIVED FROM JOANN REED FOR MARITAL PURPOSES WAS AN ABUSE OF DISCRETION AND INEQUITABLE CONSIDERING DEFENDANT RECEIVED ALMOST 50% OF THE MARITAL ASSETS THE LOAN PRESERVED.

II. THE TRIAL COURT'S DETERMINATION THAT PLAINTIFF'S SOLO LAW PRACTICE HAD A VALUE OF $100,000 WAS CONTRARY TO THE CREDIBLE EVIDENCE AND AN ABUSE OF DISCRETION.

III. THE ALIMONY AWARD WAS NOT IN COMPLIANCE WITH N.J.S.A. 2A:34-23 AND WAS CONTRARY TO THE CREDIBLE EVIDENCE AND AN ABUSE OF DISCRETION.

IV. THE COUNSEL FEE AND EXPERT FEE AWARDS TO THE DEFENDANT WERE NOT BASED UPON CREDIBLE EVIDENCE, WERE CONTRARY TO LAW, AND SHOULD BE VACATED.

V. WHILE THE NAKED CONCLUSIONS OF THE TRIAL COURT FAIL TO EXPLAIN MANY OF ITS DECISIONS, PLAINTIFF REQUESTS THIS COURT TO EXERCISE ITS ORIGINAL JURISDICTION PURSUANT TO R. 2:10-5 AND DECIDE THE ISSUES IT REVERSES.

We find insufficient merit in Points II, III and IV to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

With regard to Point I, the judge found that defendant was aware in January 2000 of the imminent foreclosure on the Vernon property "and that the only way to stave off foreclosure was for the plaintiff to borrow money from his sister." He determined that Joann Reed was "a generally credible historian about the monies advanced on behalf of the McDermotts, the reasons surrounding the advances and the loosely defined repayment arrangements." Based upon her testimony, the trial judge concluded that a loan of $80,000 was made and $74,330.62 of those proceeds were used to pay off a mortgage on the Vernon property; the judge then ordered defendant to repay 50% of the latter amount, i.e., $37,165.31. The trial judge also recognized that although "defendant was kept out of the financial information loop," defendant "knew that at times the plaintiff was borrowing money for the benefit of the family, particularly in order to fund some family college educational expenses." As a result, the judge found that the "equities in this case" require that defendant bear responsibility for a portion of those loans and required that she repay $20,000 of a $40,000 loan to which he referred.

Joann Reed, however, testified that additional loans were made. She claimed to have lent the parties $283,398.50 of which only $6300 was repaid by the time of trial. As we have observed, the judge deemed Ms. Reed to be credible with regard to the history and amount of these loans but his written decision specifically mentions only two loans totaling $120,000; as for those two loans, the judge required that defendant bear a nearly equal share of their repayment and plaintiff does not contest the reasonableness of the judge's decision about the two loans he identified. Plaintiff argues, however, that the judge should have compelled defendant to share in the repayment of the other loans Ms. Reed delineated. Although the judge's written decision might be broadly interpreted as having rejected that argument, we prefer not to base our understanding of the judge's intent on such a loose interpretation and find it more appropriate to remand for clear findings on this point.

Following our remand, the judge should consider the principles for dealing with marital debt discussed in Monte v. Monte, 212 N.J. Super. 557 (App. Div. 1986), which went unmentioned in the trial judge's written opinion. In Monte, we considered the equitable distribution of marital debt when the "[t]he parties' affluent standard of living continued not only during periods of time when earned income was meager but also . . . when plaintiff had no income because he was unable to work for over a year." Id. at 566. The trial judge in Monte found that "[d]efendant during this time was aware of the lack of income, and must have been as equally aware that since monies were spent for every day living expenses without any income, it was necessary to borrow funds upon which to subsist." Ibid. In light of these facts, the trial judge held, and we agreed, that "[i]f defendant saw the debt built up throughout the marriage and participated in the encumbrances, she was subject to sharing in the liability," but with the understanding that "if the evidence showed that her husband's debts were incurred during the breakup of the marriage 'in an attempt to undermine her equity in the marital home,' she would not be liable." Id. at 566-67. In short, defendant's lack of knowledge about specific loans is not alone determinative. The trial judge must consider whether, under the circumstances, defendant must have been aware that there were other loans -- assuming there were -- and whether they were used to preserve marital assets for her later benefit at the time of equitable distribution.

On remand, the judge should find whether Ms. Reed made any of the other loans she referred to in her testimony and whether or how the parties' responsibilities for any such loans should be distributed through application of the principles referred to in Monte.

Lastly, with regard to Point V, we decline the invitation to take original jurisdiction to resolve the remanded issues. Plaintiff bases this argument in part on the fact that the trial judge was transferred to the Law Division and that it would be more efficient if we were to decide any outstanding issues rather than leave them for another Family judge unfamiliar with the case.*fn3

This case does not present a reasonable basis for our assumption of original jurisdiction to make findings of fact based upon testimony heard by another judge. See Pressler, Current N.J. Court Rules, comment on R. 2:10-5 (2009) (observing that "it is clear that resort [to this rule] by the appellate court is ordinarily inappropriate where further fact-finding is necessary in order to resolve the matter"); see also Tomaino v. Burman, 364 N.J. Super. 224, 234-35 (App. Div. 2003), certif. denied, 179 N.J. 310 (2004); Hansen v. Hansen, 339 N.J. Super. 128, 143 (App. Div. 2001). But, the chief reason for plaintiff's request -- the original trial judge's unwillingness to participate further in the action -- is of no concern. We have held that the transfer of a judge should not "interfere[] with what was required for a fair and just resolution of" a family court matter. O'Brien v. O'Brien, 259 N.J. Super. 402, 405-06 (App. Div. 1992). It would be entirely inappropriate for a judge who presided over a trial in a family matter to refuse to fulfill our mandate to make additional findings of fact and conclusions of law. See also Donnelly v. Donnelly, __ N.J. Super. __, __ (App. Div. 2009) (slip op. at 9-10). To ensure compliance with the principle set forth in O'Brien, we direct that the remand proceedings be conducted by the judge who presided over the fifteen-day trial in this matter.

Affirmed in part; remanded in part. We do not retain jurisdiction.


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