Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Moffitt v. Moffitt

March 26, 2009

LAURA MOFFITT, PLAINTIFF-APPELLANT,
v.
GUY MOFFITT, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No FM-02-1882-02.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted January 5, 2009

Before Judges Lisa, Reisner and Alvarez.

Plaintiff, Laura Moffitt, has filed three appeals from multiple post-judgment orders. We calendared the appeals back-to-back, and we now consolidate them for disposition in this opinion.

The parties were married on August 21, 1987. They had two children, a daughter, born on February 21, 1988, and a son, born on June 5, 1991. The parties separated in December 2001. Plaintiff filed the divorce action on February 21, 2002. A dual judgment of divorce was entered on May 29, 2003. As a result of extensive negotiations, in which both parties were represented by counsel, the parties entered into a Property Settlement Agreement (PSA), the terms of which were included as numbered paragraphs in the judgment of divorce.

In A-0573-05T3, plaintiff appeals from a number of orders related to the division of non-retirement assets under the PSA. We modify the orders appealed from to (1) provide that the parties shall each pay one-half of the fee of the court-appointed accountant, and (2) vacate the $2700 counsel fee award against plaintiff. In all other respects we affirm.

In A-2949-05T3, plaintiff appeals from various orders pertaining to alimony, child support, tutoring expenses, equitable distribution, and counsel fees. We modify these orders to provide for correction or clarification of the effective date of the support modification and resulting calculation of arrearages. In all other respects we affirm.

The appeal in A-3178-06T3 pertains to distribution of pension plan benefits. We find no merit to the appeal and affirm.

I.

We begin with A-0573-05T3. Plaintiff appeals from three orders, dated February 18, 2005, August 24, 2005, and February 10, 2006, which, among other things: (1) distributed assets in accordance with defendant's proposed approach as endorsed in a report of the court-appointed accounting consultant William Morrison; (2) required plaintiff to pay for fees incurred by Morrison and for defendant's counsel fees and costs relating to that issue; (3) denied plaintiff's motion for the judge's recusal; and (4) entered judgment in favor of Morrison and against plaintiff for the amount of the fees, plus interest. Plaintiff argues that the trial court improperly modified the PSA by the asset distribution and by requiring her to pay Morrison's fees, and that the judge should be recused from any further proceedings, based upon his alleged bias against her.

Key to this dispute is paragraph 17 of the PSA, the initial portion of which described plaintiff's obligation to list the marital home in Franklin Lakes for sale within forty days of April 17, 2003, but which gave her the option before the expiration of that forty-day period to buy out defendant's interest. In that event, the assumed price would be $960,000, and plaintiff would pay defendant one-half of the net equity after subtracting the mortgage balance. The provision prevented plaintiff from using the transfer of retirement assets to count toward the purchase price, thus implying that her share of non-retirement assets could be used. Paragraph 17 further provided:

The parties agree that all assets that are in existence as set forth on Exhibit P-3 will be divided equally and in kind (except for post-Complaint contributions). All retirement assets will be divided in kind either by QDRO or transfer so that a 50/50 division is effectuated. However, the parties acknowledge that defendant will not divide, as part of his asset division, any post-Complaint contributions he made to his 401K or stock purchase plan. Full documentation will be provided by defendant in calculating what is post-Complaint, all other retirement assets of the parties including plaintiff's IRA and defendant's old pension plan will be divided in kind as will all non-retirement assets; . . . .

The dispute that arose with respect to this provision related to the requirement that non-retirement assets would be "divided equally and in kind." After the divorce was finalized on May 29, 2003, plaintiff apparently changed attorneys, and decided to pursue two courses of action. She sought to exercise her option to buy out defendant's interest in the marital home. She also began preparation of a motion seeking to vacate the PSA.

On July 11, 2003, defendant's attorney corresponded with plaintiff's attorney, setting forth, among other things, a listing of non-retirement assets, consisting of five itemized securities or security accounts, stating a total value of $99,473.91 as of June 18, 2003. No mention was made of any anticipated difficulties in distributing these securities in kind or of any need to liquidate them. Defendant's attorney sent another letter to plaintiff's attorney on July 16, 2003, describing a distribution defendant received from his former employer, Aon Corporation, and defendant's offer to send plaintiff a check for $8512.66 as her share, unless she preferred to use those funds toward her buy-out of the marital home.

Defendant's attorney sent a third letter on July 22, 2003, asking for a response regarding the Aon Corporation distribution, and adding: "I would also make the same request concerning the $99,473.91 of non-retirement assets that have to be divided. That in a sense is cash. Divided in half equals $48,736.95 which your client is entitled to." Defendant's attorney asked plaintiff's attorney to respond in writing. He stated that plaintiff was entitled to a total of $57,249.61, and wanted to know whether plaintiff intended to use that amount as a credit toward her purchase of the marital home. He asked for a response, including a payoff figure on the mortgage, so that calculations could be made for the closing on the transfer to plaintiff of the marital home.

Plaintiff's attorney did not respond to any of these letters. However, during this timeframe, plaintiff filed her anticipated motion seeking to set aside the PSA.

During this timeframe, defendant, who had been receiving copies of his attorney's letters to plaintiff's attorney, began liquidating some of the securities. On September 11, 2003, defendant's attorney wrote plaintiff's attorney, advising of the liquidation that was ongoing, and sending documentation to corroborate the amounts received. In one of the accounts, the Ryan Beck account, defendant arranged to have those securities that were not liquid and required sale over a period of time transferred into his name, and obtained a check for the liquid securities, which he tendered to plaintiff. The value of those two components of the Ryan Beck account were not the same, but that would be reflected in an overall adjustment so that both parties received fifty percent of the total amount of these assets.

For the first time, plaintiff's attorney responded to defendant's attorney, by letter of September 11, 2003. She referred to the motion to vacate the divorce judgment and PSA, and expressed her view that defendant acted prematurely in light of the fact that a motion was pending. She did not accept the calculations and checks that were tendered, as unilaterally prepared by defendant. And, she stated that the documentation furnished was inadequate.

Over the next several months, the attorneys continued to exchange correspondence. The motion to vacate the PSA was denied. With respect to the non-retirement assets, plaintiff insisted that the strict terms of paragraph 17 be adhered to, namely that she receive in kind distribution of each asset. Defendant's position was that this was either impossible or highly impractical, because of the illiquidity of some of the securities. Plaintiff argued that she wanted what she bargained for and what was agreed upon, that she wanted stocks as investments, and she wanted her fair share of any built-in capital losses associated with the stocks involved. Defendant's unilateral attempt to give her money instead of one-half of each stock deprived her of these purposes. Defendant insisted throughout these communications that all tax consequences had been taken into account and that plaintiff would be receiving her fifty percent share completely tax free. Defendant suggested that if plaintiff chose, she could use the money to purchase these or other securities as stock investments.

As a result of the impasse, defendant filed a motion in January 2004, which sought to address many issues, including his request for an order "[d]istributing all non-retirement assets of the parties pursuant to the Judgment of Divorce and in the manner as proposed by defendant." In support of his motion, defendant attached his attorney's letters that had been unanswered and contended that plaintiff's attorney was uncooperative. He added:

I reject their argument that it is not an in kind distribution. Some of the assets could not be equally divided; there had to be some calculations made. Never once did they respond to any of our letters to say that they opposed it and say well this is not correct or that is not correct.

Defendant suggested that the court appoint an accountant to determine whether his proposed asset division was fair, and, if so, that plaintiff should be required to pay the accountant's fees. Defendant also sought counsel fees, contending that the motion was necessary only because of plaintiff's recalcitrance and unreasonableness.

Plaintiff opposed the motion and filed a cross-motion seeking to require defendant to "purchase the investments the Plaintiff should have received 'in-kind' at his sole expense in order to make me whole." In her certification, plaintiff stated that the purpose of the in-kind division was to equalize capital losses and gains. She also contended that most of the investments had increased in value and by giving her money based upon an earlier value defendant was depriving her of her fair share. Plaintiff also sought counsel fees against defendant "for violating the terms of our agreement."

The motions were heard on February 20, 2004. After hearing oral argument, the judge ordered that William Morrison, a CPA, would be appointed to review defendant's proposal "to determine whether that accomplishes a fair, reasonable and just division considering capital gains, capital losses, basis, tax consequences, so that they each come out on a 50/50 basis." The judge further stated that if defendant's position was vindicated, plaintiff would be obligated to pay Morrison's fees.

After further colloquy and arguments, the division of these assets and Morrison's role were revisited. The judge acknowledged that he had not fully understood the underlying issue and now realized that plaintiff was actually insisting upon strict compliance with the terms of paragraph 17, namely an in-kind distribution. The judge repeatedly questioned defendant's attorney as to why plaintiff should not have been able to receive an in-kind distribution and questioned how defendant could unilaterally change the agreement. Defendant's attorney and defendant continued to insist that it was not that simple and that defendant's proposal was fair and would accomplish the underlying purpose of paragraph 17.

The judge ordered that with respect to those stocks defendant had already liquidated, the proceeds of the liquidation would be divided equally between the parties, and Morrison would analyze the remaining stocks to determine whether they could be distributed in kind, and, upon receiving Morrison's report, the judge would make the ultimate determination of whether defendant's proposed method of distribution was fair and equitable. The judge said:

I think what I'm ruling is that he decided to liquidate certain stocks, certain investments. Now, he didn't have the right to do that. Now, he's got to justify it. If that liquidation was justifiable and resulted in a fair and equal distribution, taking into consideration the language of the agreement then she pays the fee.

Defendant's counsel asserted that it sounded like the judge had changed what he previously ordered, and the judge answered, "I did."

In accordance with that oral decision, the judge entered an order on that date, by which Morrison was appointed for two purposes, to prepare qualified domestic relation orders (QDROs) to divide retirement assets, and to analyze defendant's proposed distribution of the non-retirement assets. Morrison was required by the order to "take into account all relevant capital gains and/or losses, taxes, tax basis, dividends and interest." The order further provided that "[i]f defendant's proposed distribution is determined to be equitable and equal overall and in substantial compliance with the PSA than W[ife] shall pay Morrison[']s fees. If not than H[usband] shall pay Mr. Morrison[']s fees."

On June 14, 2004, Morrison issued his report. He stated his understanding that he had been retained to review the documents submitted to him "for the purpose of determining whether Defendant Guy Moffitt's proposed distribution of funds was equitable and equal overall and in substantial compliance with the [PSA]." He stated:

I conclude that it was. I have concluded that the impact of the proposed distribution functioned as a possible hypothetical economic detriment to Ms. Moffitt of approximately $3,700 attributable to capital losses that she did not receive the benefit of and subject to a discount for illiquidity of the Ryan Beck stocks.

Morrison's analysis had two basic components. First, he analyzed the share of capital losses of which plaintiff was deprived when defendant liquidated some of the stock. Without itemization, he reported that "[t]he cost basis of shares sold was $70,955.95" and "[t]he cost basis of shares retained was $70,832.11," so "the total [cost] basis for all shares was $141,788.06." He listed $98,070.48 as "[t]he fair market value for all shares" as of September 11, 2003.*fn1

Morrison then calculated the difference between the total cost basis and the fair market value for all shares, to yield the figure for the parties' total capital losses: $141,788.06 -$98,070.48 = $43,717.58. Equally dividing that figure, each party would be allocated 50% of the total capital losses, so plaintiff's share of the capital losses would have been $21,858.79. Assuming a 25% tax rate, Morrison calculated the after-tax value of plaintiff's share of the capital losses was $5,464.70 ($21,858.79 x .25 = $5,464.70). Morrison further explained:

The amount of $5,464.70 above, which is a hypothetical economic detriment to Ms. Moffitt, would not have been recognized by her immediately because capital losses may only be used to offset ordinary income in the amount of $3,000.00 per year, if there are no other capital gains. Thus, the $21,858.79 of capital losses shown above, would have been used over a period of eight years, in the amount of $3,000.00 per year, which equates to a tax benefit of $750.00 per year for seven years, and $214.69 in the eighth year ($5,464.70 in total). For purpose of calculating the present value of the $5,464.70, I assumed an interest rate of 5%. The present value equals $4,485.10, which is the economic detriment suffered by Ms. Moffitt attributable to the potential capital losses. If Ms. Moffitt offset the losses against capital gains, the benefit would have been lower. If Ms. Moffitt's tax rate was lower, the lost benefit would likewise have been lower. If her tax rate was higher, the last [sic] would have been higher.

For the second component of Morrison's analysis, he calculated a "discount for illiquidity" figure regarding the Ryan Beck stocks:

The fair market value of the Ryan Beck stocks was $16,047.00 on September 11, 2003. Ms. Moffitt's share was $8,023.50. I understand however that stocks held in the Ryan Beck account were illiquid. In accordance, I estimate that a discount for illiquidity of 10% is appropriate. Thus, Ms. Moffitt's share should be discounted by $802.35 (10% of $8023.50).

Combining these two components, Morrison concluded that plaintiff "incurred an economic detriment of $3,682.75," representing the $4,485.10 present value of share of capital losses minus the $802.35 discount for illiquidity of Ryan Beck stock.

Morrison further explained his conclusion: "These hypothetical damages equal 7.3% of the amount due. Accordingly, I conclude that Mr. Moffitt's proposed distribution was equitable and equal overall and in substantial compliance with the [PSA]." Morrison further explained that his bill for this matter was $10,710.37, due to the "sheer volume and condition" of the records involved, including information that was "handwritten and disorganized." He noted that he had "expressed to Counsel on multiple occasions, due to the amount of money in dispute, applying a cost/benefit analysis, this project was not an efficient use of the party's [sic] finances."

In January 2005, defendant filed a motion to compel plaintiff to pay Morrison's fees because Morrison's report vindicated defendant's position on the distribution. Plaintiff objected to Morrison's report. She contended it was not based on sound accounting principles, was incomplete because it was not accompanied by spreadsheets and other supporting data, and it did not cover all of the issues referred to Morrison by the court. She opposed the judge's prior order that she should be required to pay Morrison's fees, which she characterized as "exorbitant and incorrect." Plaintiff cross-moved for an order that would require defendant to pay Morrison's fees. Plaintiff enclosed a letter from an accountant she retained, questioning some aspects of Morrison's report. Indeed, plaintiff filed a grievance against Morrison with the New Jersey Board of Accountancy.

The court heard the motions on February 18, 2005. The judge concluded that Morrison's report was sound, that plaintiff did not demonstrate any actual loss to her by defendant's proposed distribution, and that the hypothetical loss set forth in Morrison's report was relatively insignificant. As a result, the judge concluded that Morrison's report was reasonable. He approved it and adopted it, finding "that the distribution made by Mr. Moffit was equitable, fair overall and in substantial compliance with the PSA." As a result, based upon his prior order, he directed plaintiff to pay all of Morrison's fees. Morrison deducted $500 from the bill previously submitted, to account for work that was performed on preparing the QDROs, and not properly included in the bill for analysis of distribution of the non-retirement assets. Therefore, plaintiff was ordered to pay $10,210.57. The judge denied plaintiff's motion to compel defendant to pay Morrison's fees.

On June 17, 2005, the court issued a written decision requiring plaintiff to pay defendant's counsel fee of $2700. The judge entered an order for that fee award on August 24, 2005. On October 7, 2005, plaintiff filed a notice of appeal from the February 18, 2005 and August 24, 2005 orders.

In December 2005, Morrison moved for an order to adjudge plaintiff in violation of litigant's rights for failure to pay his fees. He also sought imposition of a 1.5% monthly interest finance charge. Plaintiff filed a cross-motion for various forms of relief, including a stay pending appeal. She repeated her contention that she should not be required to pay Morrison's fees, stating that defendant's "disregard for complying with the PSA went unpunished, however the court chose to punish me by assessing counsel fees, Morrison's fees and I have the burden of my own legal fees." She also argued that the judge should recuse himself and not decide the motion, contending that the judge had demonstrated bias against her throughout the proceedings.

The motions were heard on February 10, 2006. Plaintiff appeared pro se. The judge had not been furnished with a copy of plaintiff's notice of appeal and proceeded to dispose of the matter. He ordered plaintiff to pay $10,210 to Morrison, with interest payable at rates provided in the Rules of Court. The judge declined to recuse himself, and set forth the reasons on the record. He entered an order on that date, entering judgment in Morrison's favor. On April 19, 2006, plaintiff filed an amended notice of appeal to incorporate the issues in the February 10, 2006 order.

Plaintiff contends that the trial court erred in referring the non-retirement funds distribution issue to Morrison for analysis, and for accepting Morrison's flawed report and recommendations.

"The findings of a trial judge are entitled to great deference and will be overturned only if 'we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Platt v. Platt, 384 N.J. Super. 418, 425 (App. Div. 2006) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).

From our review of the entire record of these proceedings, we are satisfied that the record supports the judge's conclusion that division of these assets strictly in-kind was not feasible, that liquidation and division of the proceeds was fair and equitable, and that this distribution was functionally equivalent to and therefore in substantial compliance with paragraph 17 of the PSA. The judge did not mistakenly exercise his discretion in appointing an independent expert to analyze the consequences of defendant's proposed method of distribution. The contentions of the parties made clear that, in addition to merely determining fair market value and dividing that amount in half, there were potential tax consequences that might be significant and might skew the results if one side or the other retained some of the stocks in-kind. We also find no error in the judge's acceptance of the Morrison report in furnishing a basis for the conclusion that defendant's distribution constituted substantial compliance with the PSA. We therefore affirm the order approving that distribution.

However, we do not agree that plaintiff should have borne the entire burden of Morrison's fee. It was defendant who took it upon himself to begin liquidating the assets before reaching agreement with plaintiff to do so or seeking court permission. Thus, the burden should have been on defendant to establish that his proposed method substantially complied with the terms of the PSA. Nevertheless, plaintiff's position and conduct on this issue was not completely reasonable and contributed to the need for these proceedings. In our view, both parties contributed to the need for judicial resolution of this issue, and both should share equally in paying the fees of the court appointed accountant, whose services were necessary to enable the court to resolve the dispute.

For similar reasons, we conclude that the judge mistakenly exercised his discretion in requiring plaintiff to pay defendant's counsel's fees. Defendant's conduct was equally responsible for precipitating the dispute. Both sides should pay their own counsel fees under these circumstances.

Accordingly, we modify the orders under review to require each party to pay 50% of Morrison's fees and to vacate the order requiring plaintiff to pay ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.