July 7, 2009
KURT CHRISTOPHER, PLAINTIFF-APPELLANT,
TARA CHRISTOPHER, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1178-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 5, 2009
Before Judges Parker, Yannotti and LeWinn.
Plaintiff appeals from several provisions of a final dual judgment of divorce entered by the trial court on July 6, 2007, and amended on July 17, 2007. For the reasons that follow, we affirm in part, reverse in part and remand for further proceedings.
Plaintiff and defendant met in 1995. They became engaged to be married in that year and began to reside together in plaintiff's apartment in New York City. The parties were married on July 20, 1996. Plaintiff is a physician, who practices in the field of obstetrics and gynecology. Defendant is a college graduate who has worked as a personal trainer. The parties have three children: a daughter, born in 1999; a son, born in 2001; and a son born in 2002. They resided in a home in South Orange that they purchased in February 2000.
The parties separated in November of 2004, after defendant obtained a temporary domestic violence restraining order against plaintiff. Plaintiff filed his complaint for divorce on December 3, 2004, and defendant filed her counterclaim in January, 2005. Trial in the matter was held on various dates between February 2006 and December 2006.
On July 6, 2007, the trial court issued a comprehensive written opinion, in which the court: granted the parties a dual judgment of divorce; equitably distributed the marital property; established plaintiff's obligation for child support in the amount of $63,281 per year; awarded defendant permanent alimony of $200,000 per year; designated defendant as the parent of primary responsibility; granted plaintiff parenting time; required plaintiff to contribute to the child's "camp [and] special educational needs" expenses; and awarded defendant attorneys' fees and costs in the amount of $238,813. The court required plaintiff to pay expert fees of $20,000. The judgment was amended on July 17, 2007, to include more detailed instructions for payment of plaintiff's child support obligation.
In his appeal, plaintiff raises the following issues for our consideration:
THE TRIAL COURT INCORRECTLY VALUED PLAINTIFF'S INTEREST IN HIS MEDICAL PRACTICE FOR EQUITABLE DISTRIBUTION PURPOSES.
THE COURT ERRONEOUSLY AWARDED PERMANENT ALIMONY TO DEFENDANT AFTER AN [EIGHT AND ONE-HALF] YEAR SHORT-TERM MARRIAGE.
A[.] Dependent Spouse's Inability To Sustain The Marital Lifestyle Indefinitely Does Not Support A Permanent Alimony Award.
[B.] The Length Of The Marriage Should Not Include [The] Period While The Parties Were Dating.
[C.] The Trial Court Erred In The Amount Of Alimony Awarded.
THE TRIAL COURT ERRED WITH RESPECT TO THE AMOUNT OF CHILD SUPPORT AWARDED AS WELL AS THE ALLOCATION OF THE CHILDREN'S EXPENSES.
THE TRIAL COURT ERRED IN AWARDING DEFENDANT SOLE LEGAL CUSTODY OF THE CHILDREN AND NOT ORDERING MID-WEEK OVERNIGHT PARENTING TIME TO PLAINTIFF.
THE TRIAL COURT WAS IN ERROR IN ITS EQUITABLE DISTRIBUTION AWARD IN NOT TAKING INTO CONSIDERATION THE PLAINTIFF'S PREMARITAL PROPERTY.
THE TRIAL COURT WAS IN ERROR IN ALLOCATING SOLELY TO THE PLAINTIFF CERTAIN DEBTS, INCLUDING CREDIT CARD DEBT AND DEFENDANT'S AUTO LOAN.
THE TRIAL COURT ERRED IN ITS AWARD OF COUNSEL FEES AND EXPERT FEES.
[THE TRIAL COURT JUDGE] SHOULD BE RECUSED FROM ANY REMAND.
We turn first to plaintiff's contention that the trial court erred in determining the percentage of plaintiff's ownership interest in his medical practice for purposes of equitable distribution.
A trial court has broad discretion regarding the equitable distribution of the marital assets. Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985). "Deference [to the trial court's findings] is especially appropriate 'when the evidence is largely testimonial and involves questions of credibility.'" Cesare v. Cesare, 154 N.J. 394, 412 (1998) (quoting In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997)). We will not reverse the trial court's determination unless it is shown to be an abuse of discretion. Borodinsky v. Borodinsky, 162 N.J. Super. 437, 444 (App. Div. 1978).
In its written opinion, the trial court found that plaintiff's medical practice had a value of $1,210,000, as of the date plaintiff filed his complaint for divorce. The court allocated the entire practice to plaintiff and divided its value equally between the parties.
Plaintiff argues that the court erred by refusing to acknowledge certain agreements between plaintiff and Dr. Shawna Hedley (Hedley) that provided for the transfer to Hedley of forty-nine percent of the practice on July 1, 2005. Plaintiff also argues that the court should have considered the value of the practice as of July 1, 2005, rather than the complaint date.
At the trial, plaintiff testified that in July 2001, he hired Hedley to work in his medical practice. Plaintiff stated that he and Hedley had an oral agreement that Hedley would be paid $125,000 in her first year of employment, $150,000 in the second year, $200,000 in the third year, and $275,000 in the fourth year. Plaintiff said that it was agreed that, at the beginning of the fifth year of her employment, Hedley would become a partner in the practice. Hedley testified that she and plaintiff had agreed that she would not be required to pay any money to become a partner; rather, her assistance in building the practice would be her "payment."
Dr. Sean Henry (Henry) agreed to join the practice as of July 1, 2004. Plaintiff testified that, although his income from the practice would initially decrease with the addition of the two physicians, he believed that his income would ultimately increase as the practice grew.
Plaintiff also said that he decided to memorialize his oral agreement with Hedley because his "personal life [was] going down" and because Hedley wanted more assurances as to the stability of the practice. Hedley testified that she wanted a written agreement to protect her interests because Henry was going to join the practice.
Even so, plaintiff and Hedley delayed in executing a written agreement. In October 2004, plaintiff sought advice from an attorney concerning a possible divorce from defendant. Soon thereafter, plaintiff retained an attorney to draft written agreements with Hedley. Plaintiff and Hedley later executed the agreements, which were made effective as of November 24, 2004, the day after plaintiff and defendant separated.
Plaintiff and Hedley executed a stock purchase agreement, which provided that on July 1, 2005, forty-nine percent of the practice's shares would be transferred to Hedley in exchange for her payment of $11,912.39. The agreement further provided that plaintiff would be entitled to all "accrued balances" in the practice's bank and stock accounts, as well as all of the practice's net accounts receivable.
Plaintiff and Hedley also executed an employment agreement and a shareholder's agreement. The latter agreement authorized plaintiff to terminate the practice at his sole discretion and allowed him to retain all patient files, phone numbers and the corporate location in the event the practice was dissolved. About two weeks after the agreements were effective, plaintiff filed his divorce complaint. Plaintiff acknowledged that the agreements were drafted in part because of his impending divorce.
Plaintiff and Hedley testified that they told the attorney who prepared the agreements that they did not want to include any buy-in payments from Hedley. Plaintiff and Hedley also testified that they did not review the agreements carefully before they signed them. They assumed that the agreements would conform to the terms of their oral agreement. Nevertheless, when plaintiff and Hedley learned of the terms in the written agreements, they did not seek to change them. Hedley did not pay the required buy-in payment and no stock was ever issued for the practice.
David E. Politziner (Politziner), was appointed by the court as a joint forensic accountant to determine the fair value of the practice and plaintiff's share thereof. Politziner concluded that, as of December 3, 2004, the value of the practice was $1,196,000. Politziner assigned only fifty-one percent of the value of the practice to plaintiff. He based this allocation upon the written agreements between plaintiff, Hedley and the practice.
Politziner recognized, however, that plaintiff's sale of forty-nine percent of his shares in the practice should have been reported on plaintiff's tax returns and had not been. He also acknowledged that plaintiff's, Hedley's and the practice's tax returns did not reflect the amounts due from Hedley under the agreements or plaintiff's agreement to relieve Hedley of this obligation.
Defendant's expert, Robert Joseph Gunteski (Gunteski), opined that, as of December 3, 2004, the value of the practice was $1,210,000. Gunteski further opined that plaintiff owned one hundred percent of the practice as of that date. Gunteski opined that, because plaintiff, Hedley and the practice had not recognized the sale of the forty-nine percent interest in the practice to Hedley, plaintiff should be considered the owner of one hundred percent of the practice as of the complaint date.
In its written opinion, the trial court found that plaintiff owned one hundred percent of the practice as of the complaint date and the value of the practice would be divided equally between the parties. The court noted that, while the agreements provided that Hedley would receive stock ownership and a financial sharing in the partnership as of July 1, 2005, the agreements stated that Hedley was not an owner with the right to financial sharing as of November 24, 2004, two weeks prior to the date when plaintiff filed his complaint for divorce.
The court also noted that Hedley never made the buy-in payment of $11,912.39 as required by the agreement. The court additionally noted that, while the practice's tax return for 2004 reported the change in ownership, plaintiff did not report the sale of shares in his individual income tax return for 2004.
The court also pointed out that plaintiff and Hedley had not complied with other provisions of the agreements. Furthermore, plaintiff had not received any of the monies he was entitled to receive under the terms of the agreements and he had repudiated those terms while claiming other provisions of the agreements were enforceable.
Based on these facts, the trial court made the following findings:
The plaintiff, after consultation with matrimonial lawyers, attempted to manipulate the date and acceleration of Dr. Hedley's ownership interest a full nine months before she was to become an owner. The plaintiff's haste in accelerating the [change in] ownership is evidenced by the plaintiff and Dr. Hedley testifying they did not read but repudiated certain terms of the agreements after their execution on November 24, 2004. Under the agreement[s], the plaintiff was to receive approximately $341,175.02 which sum would be available for equitable distribution. It is clear the medical practice doubled its revenues and presumably its value from the years 2000 through 2004. The medical practice's gross receipts grew approximately $1,775,353 in 2005 from $1,638,105 in 2004 [and] from $1,422,147 in 2003. The plaintiff wrongfully attempted to manipulate his ownership percentage to deprive the defendant of her fair share of equitable distribution of the medical practice while maintaining 100% control of a medical practice, financially growing by double digit percentages. Under the circumstances[,] the plaintiff failed to prove he entered the November 24, 2004 agreements with Dr. Hedley in good faith. The plaintiff clearly intended to deprive the defendant of her share of equitable distribution of the medical practice as of November 24, 2004[,] by his attempt to transfer 49% of his ownership of his medical practice to Dr. Hedley. Moreover, to enforce the agreements in this matrimonial litigation under such circumstances, and to deprive the defendant of her share of equitable distribution would be unfair and inequitable[.]
We are satisfied that there is sufficient credible evidence in the record to support the court's decision to ascribe one hundred percent of the practice to plaintiff, despite his purported agreement with Hedley to transfer forty-nine percent of the practice to Hedley. The court properly determined that plaintiff's hasty execution of the written agreements was an improper effort by plaintiff to manipulate his ownership interest in the practice for purposes of depriving defendant of her equitable share of plaintiff's interest.
We are additionally satisfied that the trial court did not abuse its discretion by valuing the practice as of the complaint date. The date the complaint is filed is generally the date when marital assets are valued. Painter v. Painter, 65 N.J. 196, 218 (1974). Here, the trial court properly valued the practice as of the complaint date. Indeed, this case does not present a situation where the value of the asset fluctuated due to plaintiff's diligence or market conditions over which he had no control. Addesa v. Addesa, 392 N.J. Super. 58, 76-77 (App. Div. 2007) (citing Scavone v. Scavone, 243 N.J. Super. 134, 136-37 (App. Div. 1990)). Rather, the value of the practice was altered by agreements designed to manipulate plaintiff's ownership interest in the practice in order to deny defendant of her rightful share of the marital asset.
Plaintiff also contends that, if the court treated him as owning one hundred percent of the practice as of the complaint date, it should have treated the agreement to transfer forty-nine percent of the practice to Hedley as a contingent liability, which reduced his ownership interest to fifty-one percent as of the complaint date.
Again, we disagree. As the trial court found, the agreements were essentially a sham that Hedley and plaintiff never fully implemented. We are convinced that, under the circumstances, the trial court did not err by refusing to consider the agreements as creating a contingent liability as of the complaint date.
We turn to plaintiff's contention that the trial court erred by awarding defendant permanent alimony. Plaintiff contends that the court should have awarded defendant limited duration alimony.
An award of alimony is authorized by N.J.S.A. 2A:34-23 and is governed by the factors enumerated in N.J.S.A. 2C:34-23(b). When an award of permanent alimony is not warranted, N.J.S.A. 2A:34-23(c) allows the court to award limited duration, rehabilitative, or reimbursement alimony. Limited duration alimony cannot, however, be awarded "as a substitute for permanent alimony in those cases where permanent alimony would otherwise be awarded." Ibid.
In Cox v. Cox, 335 N.J. Super. 465, 476 (App. Div. 2000), we noted that: limited duration alimony is not intended to facilitate the earning capacity of a dependent spouse or to make a sacrificing spouse whole, but rather to address those circumstances where an economic need for alimony is established, but the marriage was of short-term duration such that permanent alimony is not appropriate. Those circumstances stand in sharp contrast to marriages of long duration where economic need is also demonstrated. In the former instance, limited duration alimony provides an equitable and proper remedy. In the latter circumstances, permanent alimony is appropriate and an award of limited duration alimony is clearly circumscribed, both by equitable considerations and by statute.
All other factors being equal, the "defining distinction" between permanent and limited duration alimony is the duration of the marriage. Id. at 483. Thus, limited duration alimony is available to dependent spouses who contributed to a relatively short-term marriage, and who have "the skills and education necessary to return to the work force." Gordon v. Rozenwald, 380 N.J. Super. 55, 65-66 (App. Div. 2005). Such a spouse is not entitled to permanent alimony, which is awarded after a lengthy marriage for unlimited duration in recognition of prolonged economic dependence and sustained contribution to a marital enterprise. . . .
When limited duration alimony is considered in light of the void it was designed to fill, it is apparent that the "limited duration" is as critical to the purpose as its label suggests. Limited duration alimony, like permanent alimony, is based primarily on the martial enterprise. It is distinguishable from permanent alimony because the length of the marriage does not warrant permanent support[.] [Id. at 66 (citations omitted).]
Plaintiff argues that, in making the alimony award, the trial court erred by taking into account the time that the parties cohabited before their marriage. We disagree.
A court is permitted to add periods of cohabitation when determining the duration of the marital relationship, if one spouse was economically dependent upon the other during the period of cohabitation. McGee v. McGee, 277 N.J. Super. 1, 14 (App. Div. 1994). Here, the record shows that the parties met in 1995 and began to reside together after they were engaged in December, 1995. They were married on July 20, 1996. At the time, plaintiff was a practicing physician. Defendant was employed as a housekeeping supervisor at a hospital. In 1996, plaintiff earned about $250,000 a year; defendant earned about $26,000. Based on these facts, the trial court properly considered the period of cohabitation in determining the length of the parties' marital relationship.
The trial court thus correctly found that the parties had about a nine-year marital relationship. The court stated that the marriage was of "neither long nor short duration." The court further found and the parties had agreed that the standard of living they had enjoyed during the marriage was about $240,000 a year.
The court additionally determined that plaintiff has the ability to earn a gross annual income of $590,000, which includes the income from his medical practice, certain "reported or unreported" additional income from treating patients with certain sexual disorders, and perquisites received from his medical practice. The court also determined that defendant has the ability to earn an annual income of $40,000, or $33,332 net of taxes.
The court found that defendant would have a marital-standard-of-living shortfall of about $206,000, and a shortfall of about $174,000 from her current lifestyle budget. The court determined that plaintiff has the ability to continue to achieve his annual income and he will continue to "out earn" defendant in the future. The trial court concluded that plaintiff had a duty to maintain defendant at the standard of living that the parties had enjoyed during their marriage.
We are convinced, however, that the court erred by awarding defendant permanent alimony rather than limited duration alimony. Although there is no bright line between marriages of long and short duration, this marriage is more appropriately characterized as having a short rather than a long duration.
Furthermore, the record shows that plaintiff probably will earn more than defendant in the future, and defendant probably will not earn an amount sufficient to maintain the marital lifestyle in the foreseeable future. Nevertheless, those facts alone do not justify an award of permanent alimony where, as in this case, the marriage was of a short duration.
Our decision in Robertson v. Robertson, 381 N.J. Super. 199 (App. Div. 2005), is instructive. In that matter, we affirmed the award of permanent alimony to a spouse, who was less educated and skilled than her husband, thereby making it unlikely that she would ever be able to maintain the marital lifestyle on her own. Id. at 207-08. Both spouses were thirty-nine years old at the time of the divorce and had been married more than twelve years before their separation. Id. at 202. The wife had earned an associates degree and, by raising the couple's children, had given up her earning capacity and permitted her husband to achieve greater success in his business. Id. at 207.
By contrast, in this matter, the period of cohabitation and marriage was about nine years. There also is no evidence that defendant gave up any career opportunities during her marriage. The record shows that, while the parties were married, defendant continued her career as a personal trainer. We are convinced that, under the circumstances, an award of permanent alimony was not appropriate and the court should have instead awarded defendant limited duration alimony.
We therefore reverse the provision of the judgment awarding defendant permanent alimony. We remand the matter to the trial court to determine the appropriate length of time during which limited duration alimony should be paid.
Plaintiff raises several other issues. He argues that the trial court erred: in distributing certain personal property, including items of furniture; by allocating to him certain marital debts, including defendant's car loan and the balances due on certain credit cards; in determining the amounts awarded for alimony and child support; by imputing to him a gross annual income of $590,000; by awarding defendant sole legal custody of the children; and by granting him no overnight parenting time during the weekdays.
We have considered plaintiff's arguments on these issues and find that they are without sufficient merit to warrant any discussion in this opinion. R. 2:11-3(e)(1)(E).
Plaintiff also argues that the court erred by awarding defendant attorneys' fees and costs. Rule 5:3-5(c) permits a court to award attorneys' fees in a matrimonial action and lists nine factors for the trial court to consider when an application is made for such an award. The relevant factors include the parties' financial circumstances; the ability of the parties to pay their own fees; and "the reasonableness and good faith of the positions advanced by the parties[.]" Ibid.
The award of counsel fees is committed to the sound discretion of the trial court. Yueh v. Yueh, 329 N.J. Super. 447, 460 (App. Div. 2000) (citing Williams v. Williams, 59 N.J. 229, 233 (1971)). We will not disturb an award of counsel fees unless it is shown to be an abuse of discretion. Chestone v. Chestone, 285 N.J. Super. 453, 468 (App. Div. 1995) (citing Fid. Union Trust Co. v. Berenblum, 91 N.J. Super. 551, 561 (App. Div. 1960), certif. denied, 48 N.J. 138 (1966)).
Here, the trial court found, among other things, that defendant acted unreasonably and in bad faith during the litigation by making spurious allegations about defendant's fitness as a mother; advancing the baseless claim that he was a primary caregiver for the children; failing to preserve marital assets; willfully failing to comply with the court's orders; violating the court's restraining order; and endeavoring to "dissipate" the value of the medical practice. The court further found that plaintiff's "recalcitrance" impeded the litigation and the matter could have been resolved more quickly and less expensively "but for" the "unreasonable and unsupported positions" plaintiff had taken on certain issues.
We are convinced that there is sufficient credible evidence in the record to support the court's findings. We therefore affirm the court's decision to award defendant counsel fees and costs. We further conclude that the fees and costs awarded are reasonable.
We conclude, however, that the court erred by ordering plaintiff to pay the costs incurred for the jointly-appointed experts, specifically Politziner, Benson and Montgomery, in the amount of $20,000. While we are satisfied that the court did not err by requiring plaintiff to pay these costs, there was no evidence as to the amounts charged by or paid to these experts. We therefore reverse the provision of the judgment requiring plaintiff to pay expert fees in the amount of $20,000 and remand the matter to the trial court for further proceedings on this issue.
Last, we address plaintiff's contention that, in the event of a remand, the trial judge should be directed to recuse himself and the matter should be assigned to another judge. Plaintiff contends that the trial judge displayed bias towards him and should not be permitted to preside in the matter on remand.
A trial judge must exhibit at all times appropriate judicial demeanor, patience and understanding. In re Albano, 75 N.J. 509, 514 (1978). The judge must conduct the court proceedings in a fair and impartial manner. Mercer v. Wyerhaeuser Co., Inc., 324 N.J. Super. 290, 297-98 (App. Div. 1999) (citing Cestero v. Ferrara, 110 N.J. Super. 264, 273 (App. Div. 1970), aff'd, 57 N.J. 497 (1971)). In addition to being impartial, the judge must also give the appearance of impartiality. See DeNike v. Cupo, 196 N.J. 502, 514-15 (2008). See also R. 1:12-1(f) (providing that a judge may not sit in any case if there is a reason that might preclude "a fair and unbiased hearing and judgment" or "reasonably lead counsel or the parties to believe so.").
We are satisfied from our thorough review of the record that the trial judge handled this lengthy and complicated case in an impartial manner. We are convinced that the judge's findings of fact and credibility determinations, although adverse to plaintiff's positions in the case, were not the product of any animus towards plaintiff. In our judgment, the judge's factual findings and credibility determinations were properly based on the evidence and his evaluation of the witnesses who testified. We therefore conclude that the judge's recusal from further proceedings on remand is not warranted.
Affirmed in part, reversed in part, and remanded to the trial court for further proceedings in conformance with this opinion. We do not retain jurisdiction.
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