April 2, 2009
JOHN HEALD, PLAINTIFF-RESPONDENT,
RUTH HEALD, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, Docket No. FM-03-387-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 27, 2008
Before Judges Lisa, Reisner and Sapp-Peterson.
In this matter, defendant Ruth Heald appeals from post-judgment orders of the Family Part denying her motion for retroactive and prospective increases in alimony, retroactive modification of child support, discovery, and counsel fees. We affirm.
The parties were divorced in November 2006 after twenty-eight years of marriage. Four children were born of the marriage, two of whom were unemancipated at the time the parties divorced. The parties separated in 2005 and, on June 7, 2005, executed a Memorandum of Understanding that established weekly alimony and child support obligations. Plaintiff filed a divorce complaint three months later. Thereafter, extensive negotiations took place between the parties, each of whom was represented by counsel. On August 3, 2006, the parties executed a Property Settlement Agreement (PSA). As a result of extensive negotiations, plaintiff's 2004 business income of approximately $500,000 was used as a basis for determining the level of alimony and child support. The PSA provided that plaintiff would pay $130,000 per year in alimony and $20,800 per year in child support. Additionally, plaintiff agreed to be completely responsible for the children's college expenses. He also agreed to pay to defendant a lump sum of $150,000 within thirty days of executing the PSA. Further, under the agreement, defendant received in excess of one million dollars in equitable distribution as well as the marital home. On November 29, 2006, the court entered a final judgment of divorce (FJOD) that incorporated the terms of the PSA.
On February 21, 2007, defendant filed a post-judgment motion seeking various relief that included requiring plaintiff to provide: (1) a copy of his business bank account statement; (2) his business account statements for the twelve months immediately prior to the filing of the divorce complaint; (3) a full and complete copy of plaintiff's federal and state income tax returns; and (3) half the value of plaintiff's business account as of July 11, 2005. Defendant also requested counsel fees and costs. Plaintiff opposed the motion and cross-moved for further relief. Following oral argument, the court invited the parties to submit further written submissions. On April 27, Judge Evan H.C. Crook issued an order that included a written statement of reasons denying all of the aforesaid relief sought by defendant.
On May 17, 2007, defendant filed a motion for reconsideration of the April 27, 2007 order. In the motion, defendant requested that the court find that plaintiff misrepresented his income. Defendant also sought: (1) a full and complete Case Information Statement (CIS) from plaintiff; (2) additional alimony totaling $16,000 per month (or higher); (3) child support consistent with the New Jersey Child Support Guidelines and additional discretionary child support so that the children could share plaintiff's wealth; and (4) retroactive modification of plaintiff's support obligation. Further, defendant requested that plaintiff provide accounting information regarding the $150,000 lump sum payment he made to her, a discovery period for supplemental equitable distribution, additional counsel fees and costs, and sanctions.
On July 3, 2007, following oral argument, Judge Crook issued a second post-judgment order (1) granting defendant's request for plaintiff to provide a complete CIS; (2) denying defendant's request to increase plaintiff's alimony obligation to $16,000 per month based on increased income; (3) granting defendant's request to require plaintiff to pay child support for their minor children consistent with the Child Support Guidelines; (4) granting defendant's request for a discretionary amount of child support above the amount produced in the Guidelines; (5) denying defendant's request to retroactively modify plaintiff's child support obligation to August 3, 2006, the date of the PSA; (6) denying defendant's motion to require plaintiff to provide copies of account statements regarding the $150,000 transfer to defendant; (7) denying defendant's request to require plaintiff to provide defendant with copies of all investment account statements for the last three years; (8) denying defendant's request to reconsider the court's prior denial of counsel fees; (9) denying defendant's request to sanction plaintiff; (10) denying defendant's request for fees and costs associated with this motion; and (11) denying plaintiff's cross-motion for counsel fees.
On August 31, 2007, defendant filed a third post-judgment motion seeking (1) enforcement of the court's July 3, 2007 order, including its retroactive enforcement in the event there was non-compliance; (2) an increase of plaintiff's alimony obligations to allow her to regain the marital standard of living; (3) permission to depose plaintiff as a result of the incomplete and confusing information he provided; (4) payment by plaintiff for his portion of unreimbursed medical expenses in the event they have not yet been paid; (5) plaintiff to bring current all of his child support obligations; (6) plaintiff to provide his business account records for the last eighteen months; and (7) counsel fees and costs associated with the application.
On September 28, 2007, Judge Crook issued an order (1) granting defendant's request to enforce the July 3, 2007 order requiring plaintiff to provide a full and complete CIS; (2) denying defendant's request to increase alimony; (3) denying defendant's request to depose plaintiff; (4) finding moot the issue of retroactive payment; (5) finding moot the issue of plaintiff's obligation for unreimbursed medical expenses; (6) finding moot the issue of plaintiff's unpaid child support expenses; (7) denying defendant's request for plaintiff's previous eighteen months of business account records; and (8) denying defendant's request for counsel fees. The present appeal followed.
On appeal defendant raises the following points:
THE TRIAL COURT ERRED BY FAILING TO FIND THAT THE PLAINTIFF HAD MISREPRESENTED HIS INCOME AT THE TIME OF THE NEGO[TI]ATIONS OF THE PROPERTY SETTLEMENT AGREEMENT AND THEREFORE IN DE[N]YING THE DEFENDANT'S REQUEST FOR A RETROACTIVE INCREASE IN ALIMONY BASED UPON THAT MISREPRESENTATION.
THE TRIAL COURT ERRED IN DENYING THE DEFENDANT'S REQUEST FOR INCREASED ALIMONY BASED UPON THE PLAINTIFF'S INCREASE IN INCOME FROM $500,000 TO $661,000, A THIRTY PERCENT (30%) INCREASE AND BY FAILING TO FIND THAT SAID INCREASE WAS A SUBSTANTIAL CHANGE IN CIRCUMSTANCE.
THE TRIAL COURT ERRED BY REFUSING TO INCREASE THE DEFENDANT'S ALIMONY AWARD SO AS TO ALLOW HER TO REGAIN THE MARITAL STANDARD OF LIVING WHICH INCLUDED A SUBSTANTIAL SAVINGS COMPONENT, TAX COMPONENT AND OTHER EXPENSES WITHOUT A PLENARY HEARING AND WHILE IGNORING THE ONLY SUBMITTED EVIDENCE AS TO THE AMOUNT NEEDED BY THE DEFENDANT TO MEET THE MARITAL LIFESTYLE.
THE TRIAL COURT ERRED BY AVERAGING THE YEARLY INCOME OF THE PLAINTIFF IN DETERMINING WHETHER A CHANGE IN CIRCUMSTANCE HAD OCCURRED TO WARRANT AN IN[C]REASE IN ALIMONY.
THE TRIAL COURT ERRED IN CONCLUDING THAT THE DEFENDANT COULD MEET HER BUDGETARY SHORTFALL BY UTILIZING THE SUPPLEMENTAL CHILD SUPPORT, HER ALIMONY AND 100% OF HER UNEARNED INCOME.
THE TRIAL COURT ERRED IN MAKING DETERMINATIONS AND CONCLUSIONS ABOUT THE MARITAL LIFESTYLE WITHOUT A HEARING AND THE OPPORTUNITY FOR MS. HEALD TO PRESENT EVIDENCE AND TESTIMONY.
THE TRIAL COURT ERRED IN IGNORING THE ONLY THIRD PARTY EVIDENCE PROVIDED REGARDING THE LEVEL OF SUPPORT NEEDED BY MS. HEALD AND THE CHILDREN.
THE TRIAL COURT ERRED BY FAILING [TO] RECOGNIZE THE FINANCIAL IMPACT OF MR. HEALD'S MISREPRESENTA[TI]ON OF INCOME UPON THE HEALD CHILDREN AND BY FAILING TO AWARD RETROACTIVE RELIEF.
THE TRIAL COURT ERRED IN DENYING THE DEFENDANT'S REPEATED REQUEST FOR DISCOVERY REGARDING THE $150,000 TRANSFER FROM THE PLAINTIFF AND BY LIMITING THE DEFENDANT TO DIS[C]OVERY OF THE PLAINTIFF'S 2006 TAX RETURN AND AN INCOMPLETE CASE INFORMATION STATEMENT.
THE TRIAL COURT ERRED IN DENYING THE DEFENDANT'S REPEATED REQUESTS FOR COUNSEL FEES BASED UPON THE TOTALITY OF THE CIRCUMSTANCES.
We have considered each of these points in light of the record and applicable legal principles and, with the exception of Point I, conclude they are without sufficient merit to warrant further discussion here. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons incorporated in Judge Crook's April 27, July 3, and September 28 post-judgment orders. Because, however, the recurrent theme throughout all of defendant's three post-judgment motions is her contention that plaintiff misrepresented his income throughout the negotiations that led to the PSA, we address her claim in Point I that the trial court erred when it failed to find that plaintiff had engaged in misrepresentations.
Defendant contends the trial court erred in not setting aside the FJOD because plaintiff deliberately made misrepresentations relative to his income. She emphasizes that during the August 2006 PSA negotiations, plaintiff had known, for at least five months, that his 2005 business income had been approximately $630,000 and that he deliberately filed an application for extension to hide his increased 2005 business income from her, giving the tax return to her three weeks after they executed the PSA, since he needed her signature for the joint return. We disagree.
Here, the parties filed joint returns during the course of their marriage, and for the five-year period leading up to the judgment of divorce, the couple's tax return, which defendant signed, reported defendant's business income at $630,070 for 2001, $369,846 for 2002, $375,287 for 2003, and $498,282 for 2004. Moreover, during the parties' settlement negotiations, because the 2004 tax return reflected a substantial increase in plaintiff's business income, defendant's attorney wrote to plaintiff's counsel, pointing out that plaintiff's income had substantially increased for purposes of support and also that the increased income "indicates a potential for a significantly higher business value." Thus, it is clear from the record that defendant was aware of the fluctuating nature of plaintiff's income at the time the PSA was executed. Further, the record reveals that the parties had sought an extension to file their income tax return in the past. Thus, plaintiff's extension request in 2006 does not provide clear and convincing evidence that plaintiff deliberately misled defendant. The trial court stated:
Defendant's application is in this instance brought under R[ule] 4:50-1(c) insofar as Defendant has asked that a provision of the PSA be set aside due to Plaintiff's alleged fraud. However, both parties were represented by competent counsel at the time of the negotiations for and execution of the Property Settlement Agreement. Defendant has not presented evidence to demonstrate that the agreement was procured by Plaintiff's fraud. There is no indication that the settlement reached is unconscionable or that Defendant agreed to settle under duress. Rather, Defendant alleges that she did not have all of the information she might have preferred regarding all of Plaintiff's accounts. It is undisputed that the parties did not engage in formal discovery or utilize Case Information Statements. There is no suggestion that Defendant was prevented from doing so. Rather, Defendant elected to forego pre-judgment discovery presumably in favor of a more expedient settlement.
Defendant does not establish either that Plaintiff had an obligation to provide her with discovery in the absence of a discovery request or that Defendant in any way affirmatively misled her. Defendant is effectively now saying that if she had known then what she would have learned by engaging in discovery, she would not have waived discovery. To permit such an argument to prevail would make Defendant's waiver of discovery meaningless. The Court will not permit such a result.
The Court further notes that the parties' Property Settlement Agreement provides:
For the mutual promises and covenants herein contained, Wife [Defendant] hereby waives all right, title, claim, or interest she might have by equitable distribution or otherwise in the professional practice of Husband [Plaintiff] known as Heald Financial Advisors. Said waiver shall include any claim Wife might otherwise have in the value of said practice including, but not limited to, accounts, accounts receivable, work in process, fixed assets and good will.
PSA at para. V.5 (emphasis added). By the very terms of the parties' PSA, Defendant acknowledged that Plaintiff possessed business accounts. Defendant's assertion that she did not know of the existence of the account from which the $150,000 equitable distribution payment was made is clearly disingenuous; though Defendant may not have been aware of that precise account, she knew there were business accounts. The Court further finds Defendant's alleged surprise that such an account would contain $150,000 to be similarly disingenuous. Defendant herself certifies that Plaintiff earned in excess of $600,000 in 2005 through his professional practice and that at the time of the settlement Defendant knew Plaintiff's 2004 income was in excess of $400,000. It is not surprising that a business that could generate income to Plaintiff of that magnitude and that apparently has additional employees could have an account containing in excess of $150,000. If Defendant had concerns regarding the content of Plaintiff's business accounts, those concerns could and should have been addressed through prejudgment discovery. Again, Defendant having waived her right to that discovery, the Court will not permit her to rescind her waiver now. As a consequence, based upon these circumstances, the Court does not find that defendant has met her burden under R[ule] 4:50-1(c)(2007) or any other subsection of that Rule.
To the extent Defendant's argument relies upon Lepis v. Lepis, 83 N.J. 139, 157-59 (1980) and its progeny, Defendant is actually arguing for a modification of alimony and/or child support based upon significantly changed circumstances. That request is unrelated to Defendant's request for discovery regarding Plaintiff's business bank accounts. Defendant's request regarding any modification of Plaintiff's alimony or child support obligation is not included within Defendant's original notice of motion and is therefore not properly before the Court.
Although defendant did not specifically move to set aside the PSA pursuant to Rule 4:50-1 (Rule), the court analyzed her claim of misrepresentation under this Rule. We see no error in this approach.
Relief under the Rule is to be granted "sparingly." Pressler, Current N.J. Court Rules, comment 1 on R. 4:50-1 (2009). The Rule does allow for relief where the facts and equities compel it, particularly in the context of the equitable distribution of marital assets. Miller v. Miller, 160 N.J. 408, 418 (1999) (noting "the equitable authority of courts to modify property settlement agreements executed in connection with divorce proceedings is well established"). Where misrepresentation, however, is the basis for the relief sought under the Rule, the trial court must determine whether there is clear and convincing evidence of misrepresentation before granting such relief. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990); Shammas v. Shammas, 9 N.J. 321, 328 (1952). We will not reverse a trial court's decision to deny or grant relief under this Rule "unless it represents a clear abuse of discretion." Hous. Auth. of Town of Morristown v. Little, 135 N.J. 274, 283 (1994).
No such abuse is reflected in Judge Crook's orders. Contrary to defendant's argument, the record does not reveal that plaintiff at any time represented that his annual business income for 2005 was $500,000. Rather, the $500,000 business income was proposed by the defense based on the parties' 2004 return as a counteroffer to plaintiff's original $350,000 proposal that was based upon the 2003 return. Protracted settlement negotiations extended into 2006. Had defendant chosen to do so, she could have sought information regarding defendant's 2005 business income before signing the PSA. Nothing in the record demonstrates that defendant was denied this information after formally requesting it. As the court noted, defendant knew she needed to sign a joint tax return by April 2006. When she did not do so, she was at least aware that plaintiff had filed or should have filed for an extension application, and she could have inquired further. As noted earlier, the couple had filed for an extension for a previous tax year. Consequently, that plaintiff filed for an extension in connection with the 2005 return is not clear and convincing evidence of any misrepresentation.
Paintiff's alleged misrepresentation concerned his annual income which defendant knew fluctuated from year to year. Of greater significance is the fact that there is no indication from the PSA that the parties intended to use plaintiff's most current or highest year of business income as a starting point for consideration of plaintiff's support obligation calculations. In fact, it took the parties over a year to finalize their PSA that was based upon the 2004 business income figure. Also, it was defendant's attorney who expressly stated, in his August 18, 2005 letter to plaintiff's counsel, that defendant wished to avoid further delays in resolving the matter. Additionally, we recognize that Rule 5:5-2(c) imposes upon parties a continuing duty to "inform the court of any material changes in the information supplied on the CIS." Here, however, neither party had filed a CIS with the court between the time the divorce complaint was filed in 2005 and the FJOD was entered in 2006. Moreover, under the PSA,
[t]he parties further acknowledge that prior to execution of this Agreement they were advised of their right to pursue discovery, including, but not limited to, interrogatories, depositions, hiring of experts including accountants and appraisers, as well as the right to pursue other discovery techniques as might be available to them pursuant to the rules of court. By entering into this Agreement, both parties hereby waive any right they might otherwise have to pursue discovery with regard to the income and assets of the other party.
Therefore, plaintiff's nondisclosure of his 2005 business income, which defendant did not request, did not warrant post-judgment discovery. The court therefore did not abuse its discretion when it failed to grant relief under the Rule.
The remaining arguments advanced by defendant are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons set forth in Judge Evan C. Crook's statement of reasons incorporated in his April 27, 2007 and July 3, 2007 orders.
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