May 8, 2009
DENISE SPIEGLER, PLAINTIFF-APPELLANT,
PHILIP SPIEGLER, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Camden County, FM-04-1678-97.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 3, 2009
Before Judges Winkelstein, Gilroy and Chambers.
Plaintiff Denise Spiegler appeals from the order of March 13, 2008, reducing defendant Philip Spiegler's child support payments from $447 per week to $206 per week for the parties' two children. This substantial reduction is due to a number of significant changed circumstances, including the birth of defendant's third child and a substantial increase in plaintiff's income. While we conclude that the trial court correctly relied on the Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2315 (2009) (guidelines) in fixing the child support award, we reverse and remand in order that one correction be made in the calculation.
The parties were married in 1989, and had two children, one born in 1991 and the second born in 1993. The parties divorced in 1997. Although plaintiff was represented by counsel in the divorce proceedings and Property Settlement Agreement (PSA) negotiations, defendant was not. The PSA, incorporated into the Final Judgment of Divorce dated August 19, 1997, gave plaintiff the marital home while the other marital assets were divided between the parties. Plaintiff retained monies she had inherited. The PSA gave plaintiff custody of the children and required defendant to pay $490 per week in child support. It provided that "[s]aid sum has been negotiated by the parties taking into consideration respective earnings of each party and the New Jersey Child Support Guidelines." The PSA also required defendant to pay for the children's medical copayments, deductibles for dental coverage, and all prescription copayments. The PSA further provided that the child support payments would be renegotiated every three years and that "[t]he expiration of three years shall be prima facie proof of changed circumstances thereby triggering the renegotiation of the child support obligation."
At the time of the divorce, defendant was earning $48,802 annually, and plaintiff was working part-time and earning $21,000 annually. Defendant's child support payments under the PSA totaled $25,500 annually, excluding medical costs. This sum exceeded half of his gross income. After deductions were made from his paycheck for taxes, insurance payments, a 401K loan repayment, his disposable annual income was $35,908, leaving him with slightly more than $10,000 on which to live. He indicates that at that time he lived in a small apartment with a roommate due to these financial constraints.
Defendant's child support payments were reduced by consent order to $375 per week, effective January 1, 2001, because plaintiff had obtained full-time employment. Cost of living adjustments pursuant to Rule 5:6B thereafter increased defendant's child support award, so that by 2007 his child support payments were $447 per week.
Upon the birth of a child with his second wife, defendant brought an application in 2007 for the modification of his child support payments. Plaintiff filed a cross-motion opposing that application and seeking to enforce the PSA regarding dental coverage and payment of unreimbursed medical costs for the children, and seeking to require defendant to pay his share of extracurricular and extraordinary expenses for the children, and to be responsible for his share of the children's future college expenses. Defendant expressed his willingness to pay a proportionate share of the children's college expenses, but indicated that he wanted to be consulted on the selection of a college, that various financial aid should be sought, and that child support should be renegotiated at that time.
The trial court fixed defendant's child support payments pursuant to the guidelines, which the court calculated to be $206 per week. In making this calculation, the court accorded to plaintiff income of $67,787. This income was substantially larger than plaintiff's income from the previous year, when she had earned $44,553. The court attributed to defendant income totaling $80,979, consisting of his base salary of $65,000, a $400 monthly car allowance, and interest on an inheritance. When calculating defendant's deduction for his child from his second marriage, the court attributed to defendant's second wife income of $79,113, representing her earnings from her last W-2 statement. However, these earnings were unusually low because she had been on maternity leave that year. Defendant acknowledged that his second wife was expected to earn $120,000 the next year when employed full-time, and presented proofs in support of that position.
The trial court also ordered that plaintiff be responsible for the first $250 of unreimbursed medical expenses, including orthodontic care, eyeglasses, and ophthalmology care for each child and that the parties share the balance of the unreimbursed medical expenses equally. The order denied plaintiff's requests for extraordinary and extracurricular expenses and counsel fees. The court denied plaintiff's request that defendant be compelled to contribute to the children's anticipated college expenses as premature.
On appeal, plaintiff maintains that she should receive more support than the guidelines allow because the PSA had awarded her child support in excess of the guidelines and because defendant's financial circumstances with his new wife are better than hers. Plaintiff argues that the trial court should have imputed income to defendant, that the income of defendant's wife was underreported, and that the court miscalculated the interest on defendant's inheritance.
At the outset, we note that changed circumstances warrant a modification of a child support award. Lepis v. Lepis, 83 N.J. 139, 146 (1980). Here, the birth of defendant's child with his second wife constituted a change in circumstances warranting judicial review of the existing support award. See Martinez v. Martinez, 282 N.J. Super. 332, 341-42 (Ch. Div. 1995). Plaintiff's increase in income from $44,553 in 2006 to $67,787 in 2007 constituted another changed circumstance. Further, the parties had agreed in the PSA that "[t]he expiration of three years shall be prima facie proof of changed circumstances thereby triggering the renegotiation of the child support obligation." Due to these changed circumstances, the trial court was required to recalculate the child support award.
The trial court properly referred to the guidelines in modifying the child support award. The income of the parties fell squarely within the guidelines. See Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2334 (2009) (providing that the guidelines apply to all actions to fix or modify child support applications except where the obligor falls within U.S. poverty guidelines or the parents' combined income exceeds $187,200). When modifying support orders, the court must apply the guidelines, which "may be modified or disregarded by the court only where good cause is shown." R. 5:6A. Support payments that are fixed or modified in accordance with the guidelines are presumptively correct, although their application is subject to a number of factors. Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2315 (2009). Where injustice would result from their application in a specific case or where good cause exists to disregard them, the guidelines do not apply. Ibid. "The guidelines should not be altered unless [a party] has rebutted the presumption 'that an award based on the guidelines [is] the correct amount of child support, [or has established] that injustice would result' from their strict application." Lozner v. Lozner, 388 N.J. Super. 471, 482 (App. Div. 2006) (alterations in original) (quoting Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2237 (2007)).
Plaintiff argues that the guidelines should not apply here because the parties specifically bargained for a non guideline support obligation. We reject this argument. The PSA did not require that all future child support payments be calculated outside of the guidelines. Rather, the PSA provided that the passage of a three year period constituted a changed circumstance, and it further provided that the guidelines were taken into account when the support payments were fixed.
Plaintiff also maintains that the trial court erred in failing to consider that defendant's current household benefits from his second wife's income, that his second wife pays in whole or in part the costs of his child with her, and that he and his second wife are able to pay all of their expenses and save money. We reject this argument as well.
When a divorced parent remarries and has children, the court considers the addition of those children when adjusting the parent's support obligations. Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix 1X-A to R. 5:6A at 2322-23 (2009). In calculating such an adjustment, the court considers the income of the parent's second spouse. Ibid. However, the guidelines expressly provide that the income of other household members including current spouses, who are not legally responsible for supporting the child, is excluded from the calculation of the parent's income. Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-B to R. 5:6A, at 2342-43, 2360-61 (2009).
Here, the trial court did include the income of defendant's second wife when calculating defendant's deduction for his child with his second wife. See Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2322-23 (2009). The trial court, however, correctly excluded the second wife's income when calculating defendant's income under the guideline formula.
As the guidelines implicitly recognize, including the income of the new spouse in the guideline calculation would effectively result in a redistribution of the new spouse's income to her husband's former family. The financial status of defendant's second wife does not inure to the benefit of plaintiff or her children except to the extent the guidelines appropriately take into account the second wife's income when computing defendant's other dependent deduction for her child. Thus, the trial court properly considered the income of defendant's second wife only in its calculation of a deduction for his child with his second wife.
Plaintiff also complains that in the calculations, the trial court erroneously used the sum of $79,113 as the income figure for defendant's second wife. The trial court explained that this sum was taken from her W-2 statement. However, her income for that year was low because she had been on maternity leave for a portion of the time. Indeed, defendant acknowledged that $120,000 was the proper figure to use for his second wife's income when doing the calculation. Accordingly, this error needs to be corrected, and we remand in order that the $120,000 figure be used for defendant's second wife's income in the guideline calculation.
Plaintiff also disputes the trial court's treatment of defendant's inheritance when fixing child support payments. Defendant had inherited $328,965 from his father, receiving $181,177.14 in cash and the balance in the form of an IRA. We find no error here.
Defendant used the cash payment of $181,177.14 to pay off his mortgage and applied the balance toward a vehicle. Although defendant earned no income from that portion of his inheritance, the court imputed interest at the rate of five percent on the total amount of $181,177.14 and included that interest as part of defendant's income. The imputation of interest was correct since interest is imputed to an inheritance when it is placed in a non income producing asset. See Connell v. Connell, 313 N.J. Super. 426 (App. Div. 1988) (imputing income to non income producing real estate purchased by the father with his inheritance when calculating his child support obligation); see also Stiffler v. Stiffler, 304 N.J. Super. 96 (Ch. Div. 1997) (addressing this issue in the context of fixing an alimony obligation).
The balance of the inheritance, received in the form of an IRA in defendant's father's name, requires that defendant take a minimum distribution each year. Defendant's distribution in 2007 was $3,932, and the court included that sum in defendant's income.
Plaintiff also asserts that the trial court should have imputed income to defendant in the amount of $9,550.37, representing the difference between defendant's $79,350 income in 2006 and his $69,800 income in 2007.
In order for the court to impute income, the obligor must be "without just cause, voluntarily underemployed." Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998).
[T]he obligor must establish that he or she is earning at capacity, i.e., not underemployed, in order to avoid imputation. While Dorfman makes it clear that imputation is improper absent a finding that the obligor is failing to earn at capacity (i.e., unless the party is intentionally unemployed or underemployed), it does not hold that the supported spouse must establish that underemployment or that the obligor prevails by simply establishing that he or she has found a job. To the contrary, the court found the obligor established a prima facie case of a substantial change in circumstance by evidence of unsuccessful efforts to find work at comparable pay, followed by acceptance of work in the same field at reduced pay. An obligor who fails to present similarly persuasive evidence of earnings consistent with capacity faces imputation based on a realistic assessment of capacity to earn.
[Storey v. Storey, 373 N.J. Super. 464, 474 (App. Div. 2004) (citations omitted).]
The record does not reflect voluntary underemployment by defendant. He testified that he was laid off from a higher paying job, that he was unemployed for a number of months, and that he filed dozens of applications for employment. His certification states that he did the best he could to obtain the highest paying job possible. Further, a review of defendant's income history reveals that his 2007 income of $69,800 is within the range of what he has made in the past. In 2004, defendant earned $67,617; in 2005, $64,254; and in 2006, $79,350.
In light of defendant's extensive job search and the fact that he did not voluntarily leave his prior position, defendant set forth sufficient proofs that he obtained the highest paying job he could. Furthermore, he does not have a history of evading his child support obligations. These showings constitute substantial credible evidence to support the trial court's decision not to impute income to defendant. See Rova Farms Resorts, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (stating that the "[f]indings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence"); See also Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (explaining the deference the appellate court gives to the trial court's findings of credibility).
Plaintiff contends that if the guidelines are used to fix support, she is entitled to an upward adjustment of 14.6 percent because her children are now teenagers. The guideline adjustment for teenagers applies only when the initial support award is made when the child is a teenager. Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A, at 2332 (2009). Since the initial support award in this case was made before the children were teenagers, plaintiff is not entitled to this adjustment.
Plaintiff is also seeking contribution from defendant for what she labels extraordinary expenses, such as camp expenses, class trips, and driver education classes. However, as the trial court noted, these kinds of expenses are included in the child support schedules. See Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2220-22 (2009) (stating the guidelines include expenses for "[f]ees, memberships and admissions to sports, recreational or social events, lessons or instructions" and "education").
We note that the guideline calculation has resulted in a significant decrease in defendant's child support payments. This is due in part to the fact that apparently defendant has been paying support in amounts above that required by the guidelines for many years. While this adjustment in support provides equity to defendant, we must nonetheless focus on the best interests of the children. The decrease in defendant's child support payments total about $12,500 a year. However, this sum is more than offset by the increase in plaintiff's income. Thus, the income available for plaintiff's household is not experiencing the precipitous drop that initially appears to have occurred. Further, once the court applies the correct figure for the income of defendant's current wife in its calculation, the support payment will be increased to a presumably modest extent.
In conclusion, while we find that defendant's child support obligation should be fixed in accordance with the guidelines, we reverse and remand in order that the trial court recalculate the support award, using the correct income amount for defendant's second wife when computing the adjustment for defendant's support obligation to the child from his second marriage.
Reversed and remanded.
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