February 25, 2009
ALLEN RAEVSKY, PLAINTIFF-RESPONDENT,
CELY J. BRODY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Camden County, FM-04-1637-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 12, 2009
Before Judges Lisa, Reisner and Alvarez.
Defendant Cely J. Brody appeals from two orders of the Family Part dated June 27, 2007 and August 24, 2007. We affirm in part and remand in part.
Plaintiff and defendant were divorced on June 26, 2002, after twenty years of marriage. A property settlement agreement (PSA) dated December 21, 2000, was incorporated into the judgment. Part of the agreement called for plaintiff to pay defendant "rehabilitative alimony" until July 15, 2006. Shortly before the alimony was to cease, defendant moved to vacate the entire PSA, contending that it was the product of fraud and overreaching, that its terms were unconscionable, and that at the time the agreement was negotiated she was under psychiatric care and not capable of entering into an agreement. In the alternative, she moved to convert her rehabilitative alimony into permanent alimony, arguing that she was incapable of supporting herself.
After a ten-day hearing in 2007, the trial judge*fn1 found no basis to vacate the PSA. He also declined to convert defendant's rehabilitative alimony into permanent alimony. In a subsequent order, the judge compelled defendant to pay plaintiff equitable distribution owed pursuant to the PSA, and other sums that had accrued as a result of a pendente lite court order.
Defendant appeals from both orders, arguing that the judge erred in not vacating the PSA, in not awarding her permanent alimony, and in requiring her to pay plaintiff his share of equitable distribution and other sums.
We affirm the Family Part orders insofar as they uphold the validity of the PSA and enforce its provisions for equitable distribution. However, because the judge who originally approved the PSA and entered the final divorce judgment failed to make any findings concerning the marital lifestyle, and because the trial judge also failed to make such findings, we remand for reconsideration on the issue of alimony. That reconsideration must include findings of fact on the marital lifestyle at the time of the divorce and findings as to whether, in light of defendant's current earning capability and the economic benefits she received in the divorce settlement, some extension of alimony is warranted.
To put this case in perspective, we review the trial evidence in some detail. The parties were married in 1981 and had two children, an older daughter born in 1983, and a younger daughter born in 1988. Plaintiff was a certified public accountant (CPA) who operated his own small firm. Defendant had a bachelor's degree in elementary education. Prior to the marriage, she worked briefly as a teacher for a Head Start program, and as a substitute teacher in the public schools for about a year, but then changed careers and went into the insurance business. She worked in various capacities, including a long-term disability underwriter, for seven or eight years. She stopped working when the parties' first child was born in 1983. Defendant testified that she did not return to the workforce for the duration of the marriage.*fn2 At the time of the divorce, plaintiff was forty-five years old and defendant was forty-six years old.
The parties had a neighbor, Joseph De Mesquita, who was a lawyer. He had represented defendant in the early 1990s when she was in a car accident. He also represented her in a 1998 application to change her name and helped defendant negotiate a homeowner's insurance claim in 1999.
Sometime in 2000, defendant approached De Mesquita about her deteriorating marriage. De Mesquita told her that his specialty was not divorce, but he would think about how to help. At their next meeting, De Mesquita suggested that he act as a mediator. De Mesquita called plaintiff and arranged to meet, at which time they discussed the possibility of De Mesquita's mediating a divorce settlement. When De Mesquita assured plaintiff that he could be impartial, plaintiff agreed to have De Mesquita act as a mediator. Defendant claimed that plaintiff made the final decision to use De Mesquita as a mediator.
The parties agree that they met with De Mesquita between twenty and thirty times for one to two hours each session. The PSA went through two drafts before the final agreement, dated December 21, 2000, was reached. Both plaintiff and defendant testified that the PSA was backdated and actually not signed until perhaps February or March 2001. Plaintiff admitted that she made handwritten comments on a "money schedule" draft of the agreement. At one point she wrote, "not acceptable." On another draft document she wrote, "I'd like to see the sales agreement."
In the PSA the parties agreed that plaintiff would pay defendant $1,666.67 per month as rehabilitative alimony and $3,780.33 per month "to be defined as spousal consideration in the form of a property settlement as to the assets borne of marriage including child support." Plaintiff's obligations, including child support other than college costs, were to end on July 15, 2006, a month after the younger daughter's expected high school graduation. Plaintiff agreed to pay the college tuition and associated costs for both daughters. Defendant was not responsible for any college costs for the girls.
Plaintiff was also responsible for paying defendant's medical insurance, dental insurance, and prescription drug expenses until July 15, 2006, or when defendant became eligible for coverage through her employment. He was also solely responsible for all of the insurance needs and unreimbursed medical expenses of the girls. Plaintiff was required to maintain a whole life insurance policy for the benefit of the children until they had both "completed all of the future educational needs" and were "fully emancipated."
The parties acknowledged that they wished to waive a valuation of plaintiff's business to save the large expense. They acknowledged their right to full financial disclosure, but agreed to base their agreement on the discovery already exchanged. They determined that defendant's share of plaintiff's business would be $43,750.
Defendant remained in the marital home in Voorhees after the divorce, and plaintiff executed a quit-claim deed to the property. The parties agreed that the value of the house was $190,000, and the balance of the mortgage was $60,812.19. Defendant was to continue paying the mortgage. Plaintiff was given a credit of $64,593, which was one-half of the equity in the house minus an adjustment of 41/2 percent "of commission." Defendant was to pay this credit to plaintiff without interest by December 20, 2006. Plaintiff held a mortgage of $43,552 on the marital home to secure the debt.*fn3
The parties agreed to obtain an inspection report on the house to determine what repairs needed to be made. They would use a home equity line of credit from Commerce Bank to pay for the repairs, but the cost would be borne equally. However, plaintiff would advance the monies and defendant would reimburse him at the "anniversary date" of the agreement, when plaintiff's support obligations ended and defendant's reimbursement responsibility came due.
The PSA recited that both parties had been advised of "their right to exchange information and to demand full financial disclosure and discovery of the other party," and that they had "fully disclosed and exchanged any and all information as to their financial assets and their indebtedness to each other." The PSA also stated that "the discovery and evaluation of assets and liabilities of Husband and Wife as agreed within this Settlement Agreement are set forth in full, complete and final detail, based upon the full disclosure of all financial and economic matters." In a later paragraph, the PSA stated that the parties were "aware of their right to exchange information and to demand full and complete financial disclosure of the other. However, each waives his or her right to any further financial discovery from the other party."
According to defendant, plaintiff had controlled the finances during the marriage and held all of the information. During the marriage, she had no idea how much her husband earned. She claimed that the parties did not exchange any financial information during the mediation and she had no idea what "discovery" meant. She was not advised that she had the right to demand full financial disclosure regarding plaintiff's business. She asked for information regarding plaintiff's accounting practice, but she received nothing. She contended that she did not know how they arrived at the figure representing her share of the business. However, in a contradiction to her earlier testimony, defendant admitted that she did see some information, but she told De Mesquita that the figures were "a lie" and she asked to take plaintiff's deposition. According to defendant, De Mesquita told her that she could not afford to take plaintiff's deposition. Defendant also admitted that she had written notes on an "internal draft" of plaintiff's business profit and loss statement and had forwarded it to De Mesquita.
Defendant testified that she did not "deal with numbers," she "dealt with children" and did not know how they arrived at the support figures. She did not understand what rehabilitative alimony meant, how it differed from permanent alimony, or what the funds were supposed to cover. In her deposition prior to trial, she was asked, "Did you understand when you signed the agreement that it was anticipated that payments would stop on July 15, 2006," and she replied, "I understood." But at trial, she stated that that was no longer her understanding, and that her understanding had changed from the time of the deposition until the time of trial. Defendant did concede at one point during trial that although there was no rehabilitation plan in the PSA, she understood that she was supposed to find employment. However, during cross-examination, she stated that the issue of her returning to work was not addressed during the mediation.
Defendant described her typical day as arising "when her body wakes up," usually between 6:00 a.m. and 8:00 a.m., then showering. She talks to her older daughter on the phone between 8:30 a.m. and 9:00 a.m. She talks to her other daughter later in the morning. Sometimes she goes to the gym. She does laundry. Her mother is not well so she speaks to her on the phone a lot. She has not looked for a job because she has not felt well and she has "been busy" going to court.
Defendant was not aware of the Child Support Guidelines and testified that they just "pulled the number" for child support; it was not based on anything. No one explained the concept of emancipation. She did not know what equitable distribution meant or that she had a right to it.
Defendant claimed that she never saw any statements regarding the parties' IRAs. However, she later admitted that at her deposition she had stated the IRA numbers were accurate. She alleged that no one explained to her the concept of the home equity line of credit being used for home repairs. She claimed she never saw any information regarding the value of their vehicles. When presented with a printout of values from the Kelly Blue Book for a 1994 Acura Legend LS Sedan showing the trade-in value of the car to be $11,925 at the time of the PSA, she stated that it was "not accurate" because her car was not in the same condition as the one valued. Her car was valued in the PSA at $12,000.
Defendant testified that she believed that De Mesquita was her attorney, and he did not explain more than "generally" the role of a mediator. Defendant admitted that De Mesquita told her that she could have her own attorney review the PSA prior to signing it, but she did not do so because she "didn't have the money." She was "overwhelmed" by the mediation process and did not understand many provisions of the PSA, but when she asked questions, she was not given answers. Despite her signature on the PSA acknowledging that the agreement was not the result of fraud, duress, or undue influence, and that the provisions were fair, she testified that she signed the PSA despite not understanding it because she was subjected to "undue influence" and "duress," and because her "nerves were shattered." She did not believe that the agreement was fair, but signed it because plaintiff and De Mesquita made her feel like she did not have a choice.
In August 2004, two years before this hearing, in response to a motion filed by plaintiff, defendant cross-moved to enforce litigant's rights with respect to several provisions of the PSA. In support of her motion, she submitted a certification citing to the PSA and stated, "The Agreement is the Agreement. The term of payments to me was known at the time the Agreement was entered into. This should have been dealt with then - it is not as if the term end is a surprise to Plaintiff." She also stated in her certification:
Plaintiff is asking for all kinds of relief to which he is not entitled. It is my understanding that these provisions, which deal with equitable distribution, cannot be changed. If Plaintiff wants to reopen the entire Agreement, I would be happy to oblige. There are a lot of things which I cannot believe I agreed to at the time.
When confronted at trial with this earlier certification, defendant claimed that they were the words of her attorney (Nancy Gold), not her own. "[W]hat she wrote is not true. That's why I terminated her." Defendant explained that she was not a lawyer, she did not know "the system," and opined that she was a "victim of a system that I didn't know." Gold, said defendant, did not "explain anything to me" and therefore, defendant did not understand what she was signing. Regarding her certified statements in the 2004 motion, defendant added, "And, you keep having me read these statements that I really don't know what they mean, but I don't believe it's fair and equitable."
Plaintiff and De Mesquita recalled events much differently than defendant did. De Mesquita testified that he told the parties they had a right to trial and a right to formal appraisals on the business and real estate. Plaintiff provided De Mesquita with numerous financial documents, all of which he copied and gave to defendant. According to De Mesquita, although the parties did not complete a case information statement, they did complete a "budget." Likewise, plaintiff testified that there was a "full exchange" of information concerning assets and liabilities, and specific discussions were held about each. During the trial, plaintiff produced numerous documents that he claimed he gave to defendant, including Kelly Blue Book valuations on the two cars, statements regarding their IRAs, a statement of assets and liabilities with supporting documentation, profit and loss statements for his business, income tax returns for the business, and two personal financial statements, one from 1995 and one from 1998.
De Mesquita recalled explaining the difference between permanent alimony and rehabilitative alimony. He asked defendant what she wanted to do for work and discussed the option of going to school. Plaintiff was "adamant" that defendant return to work. They bargained about alimony at length, with defendant actively participating and voicing her objections. They finally agreed that alimony would end on a date about a month after the younger daughter would graduate high school. De Mesquita testified that the amount of the alimony was more than the minimum defendant needed for support, because it took into account the shorter duration of the obligation. Plaintiff likewise testified that the amount of alimony was "difficult for me to swallow," but he accepted it because he knew it would end on a date certain. He "planned everything around finalization in July ." Plaintiff testified that he "would have never entered into this agreement and signed this agreement if I had a [sneaking] suspicion or would have thought that this could be opened up the way it is opened up right now."
Plaintiff acknowledged in his testimony that there were never any discussions about what percentage of his CPA business defendant was entitled to. They talked about (and according to De Mesquita, each "threatened") obtaining a formal valuation of the business, but the cost was prohibitive, so plaintiff instead submitted the profit and loss statement and income tax returns from the business. According to plaintiff, they simply negotiated a number for defendant's share. According to De Mesquita, the value of the business was based on the profit and loss statement and three years of prior income tax returns. He did not recall how the parties arrived at the $43,750 amount for defendant's share, but he did recall a lot of discussion about it. They reviewed "each and every line" of the profit and loss statement.
De Mesquita testified that the PSA represented "the mind-set and understanding" of both parties. There was nothing in defendant's demeanor that led him to believe that she did not understand the agreement, and he was not aware that defendant was under psychological care. Plaintiff also observed no indication from defendant that she did not understand the agreement.
Defendant presented testimony from Dr. Arnold Goldman, who had been her treating psychiatrist since August 2000. At that time, defendant had just been released after being hospitalized for depression. Based on her previous suicide attempts in the mid-1990s, her hospitalizations over the years, and the way she "presented," Goldman diagnosed her as having bipolar disorder. After treating her for a time, he discovered that her bipolar disorder involved "primarily depressive states" with anxiety and a "few episodes of being hypo-manic." She suffered from insomnia and felt overwhelmed and anxious, and often avoided things instead of dealing with them. Sometimes she was hyper-talkative. According to Goldman, defendant's depression made her unable to carry out simple tasks because the anxiety was overwhelming, which led her to take sleeping pills or Ativan (a tranquilizer) and go to bed to avoid unpleasant situations. In addition to Ativan, defendant took Klonopin (a sleep aid), Wellbutrin (for depression), and Norontin (a mood stabilizer).
As part of her treatment, Goldman discussed defendant's employment history. According to Goldman, defendant knew that she had to get a job, and he tried to help her prepare. She was supposed to get forms to become a substitute teacher, but that "dragged on forever" and she was "never able to get the material together" due to her anxiety and depression. He recalled her going for an interview at a preschool in Camden, but she did not get the job.
Goldman opined that defendant's condition precluded her from being able to perform in a strict work environment. He believed she was "too anxious, too scattered at times, [and] too disorganized." He did not believe she would make a reliable employee. The only thing defendant could handle was raising her family. Goldman opined that since he had been treating defendant, she had learned to ask for help and had taken a more proactive role with her children, but overall, she had made "minimal" progress. He admitted, however, that other people with bipolar disorder and depression are able to work.
Goldman did not believe that at any time defendant was incompetent or required a guardian ad litem. He never suggested to defendant that she apply for Social Security Disability Insurance (SSDI). Defendant testified that she did not apply for SSDI because she did not understand SSDI concepts, despite having been employed as a disability underwriter earlier in her life. At her deposition, she said that she was going to look into applying for SSDI, but she explained at trial that she had not yet applied, because, "I haven't had an opportunity. I haven't had the time."
Goldman opined that during the divorce defendant was unstable and not capable of making a reasoned decision about her divorce agreement. She was not able to logically think things through, as her decision process was clouded by her desire to get a "quick out." He believed that defendant "would have signed anything that was put in front of her." She "placed herself in the hands of lawyers and completely relied upon their direction without expressing any opposition."
Leland Mosby, a psychologist who did disability evaluations, was retained by plaintiff to evaluate defendant. Mosby met with defendant on two days in October 2006, for a total of four hours. Mosby administered the Wexler Adult Intelligence Test and found that defendant had a full-scale IQ of 94, which was "solidly average." He found that she had "some very good verbal skills," but she also had a "dependent personality pattern." They discussed her past psychiatric history and her medications. He believed that defendant's depression did not fall under the category of "major depression" but rather, a chronic pattern called "dysthymia," a "significant" condition. Mosby believed she also had a generalized anxiety disorder.
Mosby explained that the Social Security Administration definition of "disability" is that an individual is "not able to engage in any substantial gainful activity by reason of a medically determined physical or mental impairment which has lasted for a period of 12 months prior to that." New Jersey has a different standard for disability, based on a variety of variables, including the work history, the severity of the medical condition, whether the medical condition is on the list of impairments, whether one can do his or her previous work, and whether one can do any other type of work. He concluded that although defendant suffered from depression and anxiety, "it's fairly clear that she's bright and could do some type of work" but she had to be "properly motivated."
Robert P. Wolf, a vocational and economic consultant and licensed rehabilitation counselor, was retained by plaintiff to prepare a report on defendant's employability. He interviewed defendant in October 2006. He also reviewed medical reports from Mosby but not from Goldman. Based on Mosby's assessment, Wolf found that defendant was "clearly employable on a full-time schedule," despite her partial disability. Due to her psychiatric problems, defendant would not be able to function at her previous higher-level occupations, but she could find entry-level work that paid in the mid-$20,000 range, plus fringe benefits. However, defendant told Wolf that she had no interest in any type of work and was not motivated to seek employment.
Defendant presented testimony from Michael Saccomanno, an expert in business valuation, forensic economic analysis, lifestyle accounting, and economic damages. Saccomanno was hired by defendant to review the PSA with regard to the valuation of plaintiff's practice, and to determine plaintiff's current income, but admitted that he was not retained to do an actual business valuation.
After reviewing documents and interviewing plaintiff, Saccomanno issued a report dated March 1, 2007. He noted that under the PSA, defendant was credited with $43,750 for her share of plaintiff's practice. He wrote, "It is our understanding that the aforementioned sum represented fifty-percent of [plaintiff's] practice," and therefore, assumed that the value for the entire practice was $87,500. Saccomanno was "unable to locate any source documents" to determine the methodology of valuation. He did, however, review two personal financial statements that plaintiff provided to lending institutions several years previously, in support of personal loans. Those statements listed the value for the practice at $250,000, but there was no methodology to show how that number was determined.
Relying on Tom West, Business Reference Guide: The Essential Guide to Pricing a Business (16th and 17th eds. 2006 and 2007), Saccomanno stated that accounting practices usually sell for two-to-four times the pre-tax income of the practice. Using plaintiff's tax returns and internal QuickBook figures, Saccomanno determined that plaintiff's discretionary earnings for 1999 and 2000 were $178,430 and $244,750, respectively. Using this formula, valuing the practice at $87,500 placed the value at forty-nine cents on the dollar, instead of two-to-four times its pre-tax income. He used the Business Reference Guide as a "sanity check," not as a sole source of providing valuations. Using plaintiff's 2004 and 2005 tax returns and internal QuickBook figures from 2006, he determined that plaintiff's adjusted average income from 2004-2006 was $196,367. Saccomanno concluded that the $87,000 value given to the practice in the PSA "does not resemble market value of plaintiff's practice as of 2000."
In a detailed fifty-six page opinion, the trial judge rejected defendant's claims, largely based on his evaluation of witness credibility. In rejecting Dr. Goldman's testimony, the judge concluded that there was not a "sufficient foundational basis" to conclude that defendant was incapable of making reasoned decisions during the mediation or that she did not understand the settlement agreement she signed. The judge noted that Goldman was unable to state which particular portions of the PSA defendant was unable to understand. He found significant the fact that Goldman did not conclude that defendant was legally incompetent, or even that she should apply for SSDI given her condition.
The judge noted that defendant was in treatment with Goldman at the time the PSA was negotiated, but Goldman did not counsel her then that she was incapable of making a reasoned decision. Goldman did not reference any studies, tests, published journals or other scientific or scholarly literature that supported his position that a person suffering from bipolar disorder with depression and anxiety was incapable of entering into contracts. Similarly, he offered no basis to conclude that it was a generally accepted practice to look back over six years and render an opinion to the "requisite degree of scientific certainty" that a particular individual was incapable of making a reasoned decision and therefore must not have understood the terms of the contract.
Additionally, the judge noted that the basis for Goldman's opinion was that given defendant's condition, she sought to avoid any stressful situations either by running away or simply agreeing with the other person to bring the matter to a quick conclusion. Based on defendant's condition, Goldman expected that she would have signed any document put in front of her in order to be spared involvement in controversy. However, the judge found that Goldman's position was in conflict with defendant's having engaged in at least twenty negotiation sessions, "sometimes of a heated nature," of at least an hour per session. The negotiations involved demands and compromises being made by both sides. The judge concluded:
Dr. Goldman did present the court with only his bare conclusion that defendant did not understand what she was doing or signing relative to the divorce mediation. . . . [He] offered no explanation or assistance to the court as to how the observed symptoms resulting from her disorder permitted the conclusion that defendant did not understand the divorce Settlement Agreement she signed or that she was generally unable to make reasoned decisions at or about the time of the divorce mediation. The court does find Dr. Goldman failed to provide a satisfactory explanation establishing a nexus or causal link between defendant's mental infirmity and the supposed inability on her part to understand the import of the divorce mediation settlement. However, rather than concluding that Dr. Goldman's opinion in that regard constituted an inadmissible net opinion, it is rather this Court's conclusion that Dr. Goldman's opinion (that defendant did not understand the agreement she signed) was lacking in sufficient foundation such that the opinion must be considered unreliable. As referenced above, the lack of an adequate factual basis coupled with the lack of any corroborating studies, tests, or other authoritative sources leads the court to the conclusion that Dr. Goldman's testimony has failed to establish a reliable scientific foundation for his purposed expert opinion that defendant was unable to make reasoned decisions and did not understand what she was signing.
The judge then found that "defendant's own testimony and conduct belies the position that she did not understand the terms of the divorce mediation Settlement Agreement." After recounting the testimony of plaintiff, defendant, and the other witnesses, and noting their vast disparities, the judge evaluated credibility. He found that there were "several inconsistencies" that did not reflect well on defendant's credibility. First was her certification to the court in 1998 during her name change application, in which she said she had been employed by plaintiff's firm, but which contradicted her testimony at trial that she had not worked after the youngest child was born.
As further evidence of her lack of credibility, the judge observed that defendant "appeared to handle the trial, an effort that certainly could be characterized as a very stressful condition, in an acceptable manner." She testified for an extended period, she "field[ed] the questions" presented and responded accordingly. She "withstood the rigors" of cross-examination and "never gave the impression that she was intimidated or overwhelmed." To the contrary, she distinguished minute differences in documents. She was also "much more straightforward and forthright" in her answers during direct examination than in her answers on cross-examination, when she offered "argumentative or evasive answers." The judge noted that the trial took place seven years after the PSA was signed, but recalled Goldman's opinion that defendant had not improved much since that time. Despite these observations, the judge said he was "nevertheless hesitant to extrapolate defendant's conduct during the trial to that of her conduct during the mediation sessions."
The judge acknowledged other inconsistencies in defendant's testimony, such as her various claims that she thought De Mesquita was "her lawyer," but also her acknowledgment that he told her initially that he could not help her and would recommend another lawyer. At one point, she testified that she did not remember the day she signed the PSA, and at another point, she indicated that the dates were inaccurate and the agreement had been backdated. Further, at some points in her testimony she claimed she was not provided with any documents, but at other points, she conceded that a lot of documents were given to her. Although she contended that she just "gave in" to plaintiff's demands, she identified her handwritten notes on several documents expressing her opposition to various settlement terms. The judge concluded that "defendant sought to inaccurately minimize her active participation during the mediation process." "Similarly, the court was not persuaded when defendant sought to downplay her I.Q. as well as her ability to comprehend." The judge found that defendant's "combativeness seemed unwarranted and her asserted ignorance seemed feigned."
The judge also noted that defendant's position that she did not understand the PSA and she only signed it under duress was "at odds" with the position she took during the August 2004 motion that the PSA should be enforced. He further found it "significant" that defendant's stance with regard to that motion was that the attorney wrote it, and she signed it but did not understand it because the attorney had not explained it to her--an account "strikingly similar" to her trial testimony about the PSA. The judge found defendant's certified statements "noteworthy" because defendant sought to rely on the terms and conditions of the PSA when it was to her advantage.
The judge found that defendant's statements regarding her ability to work also adversely affected her credibility. Defendant said she did not understand the concept of SSDI despite having worked as an underwriter for the disability department of an insurance company. She explained that she had not filed for SSDI because she had not had the time, but the judge concluded: "It would seem that defendant had a great deal of time for the last 61/2 years given a description of her daily routine."
Further, defendant testified at trial that she did not understand that she had a right to have the PSA reviewed by an attorney of her choice, but at her deposition, said that she did understand that right. The judge concluded that defendant's testimony was "lacking in credibility and not worthy of belief."
On the other hand, the judge found plaintiff's testimony to be "clear, concise and consistent." He was not impeached on any "material issue." On the whole, the judge found plaintiff to be a credible witness.
After discussing the law on spousal agreements, the judge concluded that defendant failed to prove fraud in the procurement of the agreement, either in the form of collusion between plaintiff and De Mesquita or failure to provide full financial disclosure. He found no fraud, unconscionability, overreaching or mutual mistake with regard to the valuation of plaintiff's business. No formal valuation was performed and no percentage of value was assigned to defendant. Rather, the parties "negotiated a dollar number for the business consistent with the other bargained for exchanges." The judge was "unimpressed" with Saccomanno's "sanity check." Although the judge understood Saccomanno's methodology, he produced "something less than an appropriate business evaluation." Even if his techniques and opinions were accepted as true, the "alleged disparity in the value of the business still falls short of facilitating defendant's meeting her burden of proof." The judge found that even if plaintiff received an advantage concerning the business, defendant received a countervailing benefit regarding the equitable distribution of the marital home and the responsibility for college costs for the children.
The judge further concluded that the PSA was not unconscionable and its terms were not unfair or oppressive. Rather, there were trade-offs in the agreement and defendant did not demonstrate such patent unfairness that no reasonable person would accept its terms. Relying on Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004), the judge reasoned that the parties' conduct during the life of the agreement was a factor to consider in determining whether the agreement was fair and equitable. As evidence of their intent, defendant sought to enforce the agreement in her 2004 motion and certification, and both parties performed under the PSA for over five years:
As concerns the reasonable expectation of the parties during the life of the Settlement Agreement, plaintiff testified that he was willing to pay an amount that he believed was in excess of defendant's needs so that he could end his alimony responsibilities on a date certain. Defendant had the opportunity to challenge the validity of the Settlement Agreement, for example during her 2004 cross-motion, but she chose not to do so. To the contrary, during that time period, defendant took the stance that "the Agreement is the Agreement," and sought to enforce the terms that benefited her at the time. Consistent therewith, plaintiff honored the terms of the agreement to the best of his ability even though he sought to have the portions of it modified by means of motion practice.
During that 2004 motion, the parties entered into agreements on many of the matters in dispute, the court ruled on others, and the parties continued with their lives consistent with the stability and guidelines set forth in their Settlement Agreement.
The judge also concluded that defendant had not proven changed circumstances, under Lepis v. Lepis, 83 N.J. 139 (1980), so as to justify an additional award of alimony. Accordingly, the judge denied defendant's motion to reform, vacate, or set aside the PSA and to award permanent alimony.
On this appeal, defendant raises the following issues:
POINT I: THE TRIAL COURT ABUSED ITS DISCRETION IN DENYING DEFENDANT'S MOTION TO SET ASIDE THE AGREEMENT EVEN THOUGH THE PARTIES ADMITTED THAT SHE WAS BEING TREATED BY A PSYCHIATRIST SINCE BEFORE THE MEDIATION, THE AGREEMENT PROVIDED HER WITH A LESSER AMOUNT OF THE ASSETS AND SHE OWED THE SUPPORTING SPOUSE A CREDIT, WAS DRAFTED BY AN ATTORNEY WHO PREVIOUSLY REPRESENTED DEFENDANT AND UNILATERALLY MODIFIED HIS ROLE TO THAT OF MEDIATOR, AND CONTAINED BLATANTLY FALSE PROVISIONS.
POINT II: THE TRIAL COURT ABUSED ITS DISCRETION IN NOT AWARDING DEFENDANT PERMANENT ALIMONY EVEN THOUGH THE PARTIES WERE MARRIED FOR 21 YEARS, DEFENDANT HAD NOT WORKED FOR THE LAST 19 YEARS OF THE MARRIAGE IN ORDER TO CARE FOR THE PARTIES' CHILDREN, THE AGREEMENT DID NOT CONTAIN A REHABILITATION PLAN FOR DEFENDANT, AND THE TRIAL COURT NEVER FOUND THAT DEFENDANT ACHIEVED ECONOMIC SELF-SUFFICIENCY.
POINT III: THE TRIAL COURT ABUSED ITS DISCRETION IN DIRECTING DEFENDANT TO PAY PLAINTIFF $102,917.50 WHEN THE TRIAL COURT NEVER FOUND THAT DEFENDANT HAD BECOME ECONOMICALLY SELF-SUFFICIENT OR HAD THE FINANCIAL WHEREWITHAL TO REPAY ANY FUNDS TO PLAINTIFF WITHOUT BEING MADE TO SELL THE FORMER MARITAL HOME.
We conclude that, except as discussed below, these contentions have no merit. They were properly addressed in the trial judge's comprehensive opinion and do not warrant further discussion here. R. 2:11-3(e)(1)(E). We add the following comments.
Our review of the trial judge's factual findings is limited. We will not disturb the trial judge's conclusions so long as they are supported by sufficient credible evidence. Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Moreover, we give particular deference to the Family Part because of its expertise in matrimonial issues. Id. at 412. In this case, the trial judge made very specific and detailed credibility determinations to which we defer. See State v. Locurto, 157 N.J. 463, 470-74 (1999).
Defendant's claims that she did not understand the PSA or that she was too psychologically disturbed to consent to it, are foreclosed by the judge's credibility determinations. In particular, he did not find her expert, Dr. Goldman, credible, and he did not believe defendant's testimony. Having read the trial transcript, we find no basis in this record for us to second-guess those determinations, which the trial judge was uniquely suited to make, having seen and heard the witnesses testify. See Cesare, supra, 154 N.J. at 412. We add only that even on a cold record, there is ample support for the judge's conclusion that defendant's testimony was evasive and otherwise not credible.
Further, defendant accepted the benefits of the PSA for many years, without ever asserting that she did not understand it or that it was otherwise invalid. In fact, in an August 2004 motion, in which she was represented by counsel, she sought to enforce the PSA, and made no claim that she misunderstood it or that she was coerced into signing it. Meanwhile, according to testimony the trial judge found credible, plaintiff has relied on the PSA in paying defendant more support than he would otherwise have agreed to pay her but for her agreement that his support obligations would be temporary.*fn4 We also find no basis to disturb the trial judge's findings that the PSA was not unconscionable and that defendant's valuation expert Mr. Saccomanno was not credible.
Moreover, in light of the judge's credibility findings, defendant's claim that she cannot work is without merit. The judge found incredible her explanation as to why she has not applied for disability benefits based on her claimed inability to work. We agree. Although she formerly worked as a disability underwriter for an insurance company, defendant claimed she did not understand "the concept of disability." The judge also found that defendant understood when she entered into the settlement that she would have to return to work. He found the mediator to be a credible witness on that point, among others.
However, as the trial judge found, the PSA did not contain a rehabilitation plan with respect to defendant's return to work. This omission was contrary to N.J.S.A. 2A:34-23d, which provides as follows:
Rehabilitative alimony shall be awarded based upon a plan in which the payee shows the scope of rehabilitation, the steps to be taken, and the time frame, including a period of employment during which rehabilitation will occur. An award of rehabilitative alimony may be modified based either upon changed circumstances, or upon the nonoccurrence of circumstances that the court found would occur at the time of the rehabilitative award.
Rehabilitative alimony is intended to allow the dependent spouse time to complete preparation for a return to the workplace. It is not necessarily exclusive of permanent alimony, which presumably would be granted at a reduced rate to reflect the supported spouse's earnings:
Its purpose is to "enhance and improve the earning capacity of the economically dependant spouse." The focus of rehabilitative alimony is upon the ability of a dependant spouse to engage in gainful employment, combined with the length of the marriage, the age of the parties, and the spouse's ability to regain a place in the workplace. It is not to be considered an exclusive remedy, as "[r]ehabilitative alimony in addition to permanent alimony is favored, where appropriate."
[Cox v. Cox, 335 N.J. Super. 465, 475 (App. Div. 2000)(citations omitted).]
However, both parties testified that when they entered into the PSA, they had no understanding of the term "rehabilitative," beyond understanding that the alimony payments would end in 2006 and defendant would be required to work at that time.*fn5
The record would support a finding that defendant bargained away her right to permanent alimony in order to obtain, for six years, a much larger amount of support than plaintiff would have been willing to pay as permanent alimony. However, the process by which that agreement was approved was clearly flawed. The PSA did not set forth the parties' lifestyle for purposes of a possible later modification motion. Further, the previous judge handling the case, who approved the PSA and entered the final divorce judgment, made no findings about the parties' marital lifestyle, in violation of Crews v. Crews, 164 N.J. 11 (2000). As the Court held in Crews, even in an uncontested divorce, the court must make findings about the marital lifestyle, because that is the touchstone of a finding that the settlement is reasonable:
The setting of the marital standard of living is equally important in an uncontested divorce. Accordingly, lest there be an insufficient record for the settlement, the court should require the parties to place on the record the basis for the alimony award including, in pertinent part, establishment of the marital standard of living, before the court accepts the divorce agreement. [Id. at 26.]
In Weishaus v. Weishaus, 180 N.J. 131 (2004), the Court modified the Crews requirement in limited circumstances:
We now hold that in uncontested divorce actions, trial courts must have the discretion to approve a consensual agreement that includes a provision for support without rendering marital lifestyle findings at the time of entry of judgment. Our holding in Crews should no longer be read to require findings on marital lifestyle in every uncontested divorce. A trial court may forego the findings when the parties freely decide to avoid the issue as part of their mutually agreed-upon settlement, having been advised of the potential problems that might ensue as a result of their decision. Even if the court does decide not to make a finding of marital standard, however, it nonetheless should take steps to capture and preserve the information that is available. [Id. at 144.]
However, none of the requirements outlined in Weischaus were met here when the original judge approved the settlement. The parties did not even testify about the settlement before the court approved it.
Further, where the supported spouse makes a motion to modify a PSA, either to extend rehabilitative alimony or convert it to permanent alimony, the court must first decide what the marital lifestyle was at the time of the original PSA and then determine whether there have been changed circumstances:
In conclusion, once a marital standard of living is set, Mrs. Crews should be permitted to present evidence in support of a finding of "changed circumstances" sufficient to justify a modification of her support award. Only with that necessary fact-finding will a court have the appropriate context in which to determine whether Mrs. Crews, through her own available and imputed resources, requires continuing support from her ex-husband. If she shows that the marital standard of living was not met by the initial alimony award and her imputed resources, or if she otherwise shows changed circumstances, Mr. Crews' financial condition becomes a relevant issue for the court's consideration.
We cannot determine whether the relief defendant seeks, namely, a continuation and conversion to permanent alimony, or a combination of permanent and rehabilitative alimony, is appropriate in these circumstances because there has been no finding of the marital standard of living to guide our review. That is best left for the trial court on remand, in accordance with the principles stated. [Id. at 36.]
That is, unfortunately, the case here as well. The trial judge addressed the Crews and Lepis issues by finding that defendant had not made a showing of any changed circumstances, the touchstone of a Lepis motion. However, he made no specific finding as to the marital lifestyle, other than crediting plaintiff's testimony that the parties' pre-divorce lifestyle had been quite modest and involved a constant struggle to make ends meet. Nor did the original judge or the trial judge make the findings required by N.J.S.A. 2A:34-23b concerning the adequacy of the support provided to defendant through the PSA.
In fairness to the trial judge, we recognize that defendant, whose burden it was to prove changed circumstances, failed almost completely to present evidence on the issue of marital lifestyle. In the case information statement (CIS) filed with her motion, defendant left blank the portion of the form requiring her to detail the parties' joint lifestyle prior to the divorce. Instead, she focused her case on attacking the PSA as a whole, and on her claim that she was completely disabled from working.
In approaching the dilemma which the record presents, we acknowledge the importance of upholding divorce settlements:
New Jersey has long espoused a policy favoring the use of consensual agreements to resolve marital controversies. Voluntary agreements that address and reconcile conflicting interests of divorcing parties support our "strong public policy favoring stability of arrangements" in matrimonial matters. The prominence and weight we accord such arrangements reflect the importance attached to individual autonomy and freedom, enabling parties to order their personal lives consistently with their post-marital responsibilities. [Konzelman v. Konzelman, 158 N.J. 185, 193 (1999)(citations omitted).]
However, we also consider the countervailing principle:
The adoption of a property settlement into a divorce decree does not render it immutable. Courts have continuing power to oversee divorce agreements, and the discretion to modify them on a showing of "changed circumstances," that render their continued enforcement unfair, unjust, and inequitable. [Id. at 194 (citations omitted).]
We could dispose of this case by holding that, in a Lepis motion, it was defendant's burden as the moving party to establish what the parties' lifestyle had been at the time of the divorce and then to show a change in circumstances justifying a modification of the PSA. See Crews, supra, 164 N.J. at 31. On that basis, we might affirm the entire judgment on appeal, because defendant plainly did not meet her burden. However, that would be inequitable, and would only put off the inevitable future support application, requiring the re-litigation of factual issues which this trial judge, who already heard the parties in a ten-day trial, is probably in the best position to make.
In summary, neither the PSA nor the final divorce judgment contained any description of, or findings concerning, the parties' marital lifestyle, and the judge who approved the settlement failed to make the findings required by Crews. Nor was there any finding that the parties had freely and knowingly "decide[d] to avoid the issue" of their marital lifestyle as happened in Weishaus, supra, 180 N.J. at 144. Absent evidence of the parties' lifestyle, and the amount needed to support that lifestyle, the trial judge could not make the findings Crews requires and could not determine whether there had been changed circumstances. Further complicating the issue is the fact that defendant has clearly not lived up to her obligation under the PSA to find a job so as to be able to either support herself or at least to be able to contribute to her own support. Consequently, the court could reasonably impute income to her based on a finding that she is voluntarily underemployed.
Moreover, it appears clear that the parties understood that plaintiff would provide defendant with assets beyond those required as alimony, in exchange for a termination of his alimony requirement after six years. See Miller v. Miller, 160 N.J. 408, 420 (1999)("As part of the considerations governing a modification, a court may also take into account assets received by either party in the equitable distribution of the marital property."). The trial court may also consider whether defendant made prudent use of those additional assets. Plaintiff should not be required to replace assets given to defendant for her support but which she unreasonably dissipated.
We remand this case to the trial judge to make findings, so far as the record will allow, concerning the issues that the original judge should have made when the divorce judgment was entered: what was the parties' marital lifestyle at the time of the divorce, and whether the alimony payments and other assets provided to defendant at that time would provide adequate support. See Glass, supra, 366 N.J. Super. at 372. "Crews . . . requires that where the marital standard has not been established, a judge addressing a modification application must make such determination." Id. at 371.
In remanding, we are not necessarily requiring an additional trial; nor do we intend to give defendant an opportunity to re-litigate issues on which we have affirmed the trial judge's decision. In that regard, we note that at the time they negotiated the PSA, the parties had prepared a series of budgets or worksheets detailing their expenses and income. According to the mediator, both parties had input into those documents, which were later introduced in evidence during the trial. Moreover, although defendant presented no testimony concerning the marital lifestyle, plaintiff presented testimony on that issue. The parties' budget documents, together with the original trial testimony and, perhaps, supplemental briefs and stipulations, may be sufficient to allow the trial judge to make the necessary findings without taking additional testimony.
The judge should also address defendant's current expenses and income, the reasonableness of her expenses, and whether she is capable of supporting herself at a level consistent with the former marital lifestyle. In that regard, it is clear from the record that some imputation of income to defendant is appropriate. See Crews, supra, 164 N.J. at 27. Unlike the supported spouse in Milner v. Milner, 288 N.J. Super. 209, 216 (App. Div. 1996), who made a diligent but unsuccessful effort to find employment, defendant here had made no effort to find work. Instead, although she knew she would need to go back to work, she collected alimony while doing nothing to plan for her re-entry into the work force. Nor, despite her claimed inability to work, did she make any effort to apply for SSDI.
On the other hand, reasonable support is not mere subsistence. Lepis v. Lepis, 83 N.J. 139, 150 (1980). According to plaintiff's expert, at the time of the trial in 2007, defendant was only capable of earning about $25,000 per year upon re-entry into the job market. She may at least temporarily need some additional support from plaintiff, unless the court determines that her imputed or actual income is sufficient or determines that defendant already received sufficient assets in the divorce settlement to enable her to meet her needs. See Glass, supra, 366 N.J. Super. at 373-74; Shifman v. Shifman, 211 N.J. Super. 189, 195 (App. Div. 1986). On remand, the court may also consider whether defendant has sought employment or other sources of income such as SSDI during the pendency of this appeal, and if so, what income she currently has. See Crews, supra, 164 N.J. at 33-34 ("The supported spouse's ability to do more to support herself or himself would be as relevant for a modification ruling as when establishing the initial alimony award. That latter inquiry should occur regardless of whether an award of rehabilitative alimony was included in the initial alimony award.").
If the record is insufficient to allow the judge to make some or all of these findings, the court shall give the parties an opportunity to present additional evidence. Lastly, after making the factual findings required by this opinion, the judge shall determine whether any modification of the support provisions of the PSA is appropriate. In that regard, we note that a modification need not necessarily take the form of permanent alimony. It may take the form of a temporary extension of alimony at the current rate or at a reduced rate, see N.J.S.A. 2A:34-23f, particularly if on remand it appears that defendant still has made no effort to support herself and hence, has deprived the court of the opportunity to determine on an empirical basis whether she is capable of contributing to her own support.
We understand that since the appeal was filed, defendant has sold her house. On April 24, 2008, in response to defendant's motion for an emergent stay of an enforcement order entered by the trial court on December 7, 2007, this court ordered $130,000 of the net sale proceeds to be held in escrow pending appeal. We understand that sum to include a payment to plaintiff for his deferred share of equitable distribution, repayment for certain additional expenses, and a repayment of alimony which the court had ordered him to pay after July 2006 without prejudice to later recoupment. The portion of the proceeds representing plaintiff's share of equitable distribution shall be disbursed to plaintiff. The portion representing a refund of alimony and other expenses paid after July 15, 2006 shall remain in escrow pending the conclusion of the proceedings on remand.
Affirmed in part, remanded in part. We do not retain jurisdiction.