August 13, 2009
JANICE HIKES, PLAINTIFF-RESPONDENT,
DAVID W. HIKES, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-40690-89H.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 3, 2009
Before Judges Wefing, Yannotti and LeWinn.
In this post-judgment matrimonial matter, defendant David W. Hikes appeals from numerous provisions of the order entered in the Family Part on July 24, 2007. For the reasons that follow, we affirm in part and reverse in part.
The pertinent factual background may be summarized as follows. The parties were married on June 19, 1965, and have three children: J., born in 1967; D., born in 1969; and R., born in 1978. At the time of the proceedings below, J. was emancipated and the mother of three children; D., who was diagnosed with schizophrenia during high school, was unemancipated and resided with plaintiff in the marital residence. Issues regarding the post-secondary education and emancipation of the youngest child, R., are involved in this appeal and will be discussed below.
The parties were divorced by a judgment entered on March 5, 1992. The judgment incorporated an oral agreement between the parties according to which defendant paid $200 per week in unallocated child support on behalf of D. and R., and $200 per week in permanent alimony.
On February 10, 1999, a judge granted defendant's motion to declare R. emancipated as of June 30, 1996, and required defendant to continue paying $100 per week in child support for D. In that same order, the judge denied plaintiff's request for contribution from defendant towards R.'s college costs. On June 7, 1999, the judge denied plaintiff's motion for reconsideration, but increased defendant's child support obligation for D. to $200 per week.
Plaintiff appealed from those orders and we reversed and remanded for a plenary hearing "to address all relevant factors in a[ss]essing [R.]'s emancipation and the financial issues [d]evolving upon that determination." Hikes v. Hikes, No. A-5614-98 (App. Div. November 22, 2000), slip op. at 12. We also reversed the trial judge's denial of plaintiff's request for enforcement of certain equitable distribution provisions of the divorce judgment "based on laches[,] . . . and remand[ed] for a hearing and findings of fact in accordance with R. 1:7-4." Ibid. We ordered that prior to the hearing on remand, "both parties [were] to submit current case information statements and other relevant financial information." Ibid.
Following our remand, Judge Harriet Derman issued a series of case management orders, two of which are pertinent to the present appeal. On April 30, 2001, Judge Derman issued a case management order scheduling a settlement conference in September and requiring the parties to exchange financial documents. On August 7, 2001, Judge Derman issued an order rescheduling the settlement conference for October 2001, and providing further that defendant was to pay $100 per day after September 1, 2001, "if he d[id] not provide all documents ordered to be produced by the court in its 4/30/01 order (current CIS, 96, 97, 98, 99, 2000 tax returns [and] any amendments)."
Subsequent to the entry of those orders, both parties developed significant health problems resulting in the December 22, 2004 order entered by another judge, noting that "defendant currently suffers from a debilitating heart condition[,] and . . . plaintiff is also . . . afflicted with certain maladies which makes it very difficult for her to appear in court[,]" and ordering the following:
[G]iven [that] the parties' respective health problems have posed (and continue to pose) a significant impediment to the accomplishment of the required plenary hearing, this matter shall be dismissed without prejudice subject to a restoration application which presumably will be made at such time that the parties are well enough to physically appear and prosecute this matter . . . .
The matter was reinstated a year and a half later by an order entered July 18, 2006, which also compelled defendant to "turn over his entire financial portfolio to [plaintiff's attorney] . . . no later than . . . July 19, 2006 at his office."
In June 2007, another Family Part judge conducted a three-day plenary hearing pursuant to our 2000 remand. Defendant represented himself and plaintiff appeared with counsel. The facts adduced at the plenary hearing pertinent to the issues on appeal, are as follows.
Defendant had been employed at Merck, but retired in 1989 due to a heart condition and has not been employed since then. The support obligations set forth in the divorce judgment were based upon defendant's annual income of approximately $75,000, which was derived from stock income, social security, disability insurance and pension benefits. Defendant testified that his taxable income in 2002 was $33,000 and that by 2006, that income had decreased to $12,321; however, defendant submitted no tax returns to substantiate these claims.
Plaintiff asserted that at the time R. was preparing to attend college in 1996, defendant had assets totaling approximately $750,000. At the hearing, plaintiff reviewed defendant's investment statements that had been provided in discovery; those statements disclosed that, as of May 31, 2007, defendant's assets totaled $1,204,545.66.
Plaintiff testified that she was unable to work following the divorce, given the time needed to care for D., as well as her own health problems, which included diabetes, hypertension and a heart condition that required two angioplasties and the insertion of two cardiac stents. Thus, her only income was the support received from defendant; however, plaintiff claimed that her financial difficulties were further exacerbated by defendant's failure to pay child support and alimony in a timely fashion.
Regarding the issue of R.'s emancipation, plaintiff testified that R. performed well academically at a private high school, graduated in 1996 and was accepted at several colleges. Plaintiff stated that R. discussed his college choices with defendant by written correspondence because defendant had moved to Illinois after the divorce. In January 1996, defendant offered to pay one-third of R.'s college expenses if plaintiff and R. would each contribute the same amount.
Defendant claimed that he and R. had no meaningful relationship and that no one had consulted him regarding R.'s college education choices. Citing this lack of communication, as well as his opinion that R. lacked the desire to succeed, defendant questioned why he should contribute to R.'s college expenses. Defendant's total contributions to those expenses consisted of $1200 in checks to R. and approximately $17,000 in stock that defendant had previously purchased for R.
R. chose to attend Rutgers University. He lived with plaintiff because he could not afford room and board. R. worked during the summer and had part-time jobs during the school year. The pressures of working, commuting daily and a difficult course load caused R.'s grades to suffer. R. became distraught and withdrew from Rutgers following the fall 1996 semester. As of that time, plaintiff had paid a total $3515.51 for his Rutgers education.
R. thereafter enrolled in Middlesex County College, where he remained until the fall 2000 semester. Plaintiff paid approximately $11,700 for R.'s attendance at Middlesex County College.
In 2001, R. became employed full-time and earned almost $22,000. In the spring of 2002, R. enrolled as a full-time student at Kean University, and paid his expenses with his earnings as well as with unemployment benefits he received after leaving his prior employment. R. graduated from Kean with honors in August 2004. The total cost incurred by plaintiff for R.'s education at Kean was $18,354.95. Plaintiff testified that she also paid for a computer and dorm expenses, as well as a car, insurance and gasoline for R.
Plaintiff produced a spreadsheet documenting that the expenses she incurred in connection with R.'s post-secondary education totaled $87,897.76. She met those expenses by applying defendant's support payments, borrowing from her mother, incurring substantial credit card debt and selling stocks she had received in equitable distribution.
The trial judge rendered a decision from the bench at the conclusion of the hearing. Throughout his opinion, the judge noted that he found defendant completely lacking in credibility on several issues, including the value of his assets. The judge referred to defendant's history of support arrears and his failure to abide by numerous discovery orders. The judge further found that defendant "intentionally continued to hamstring, obstruct, hinder, delay, and in fact defraud . . . his two children . . . ." The judge added that defendant "continuously pled poverty to anyone who would listen to his story."
The trial judge found further that defendant was equally obstinate in complying with the discovery orders entered in April and September 2001. The judge stated that defendant brought all of this on himself. He was the one who had control of this information, he never gave the information, and only on threats of incarceration and trying to move the case along, did he ever supply the information. The [c]court would note that as of this date, it has received in various dribs and drabs, the information.
The judge found that the "$100 a day sanction [in Judge Derman's order] was reasonable," and imposed sanctions pursuant to that order totaling $212,400. The judge found that defendant had the ability to pay this amount "with the amount of assets that the defendant ha[s] . . . ."
The judge ordered R. emancipated as of the date of his graduation from Kean University in August 2004. He therefore ordered defendant to pay child support for R. from 1996, when R. had been previously deemed emancipated, to August 21, 2004.
In addressing R.'s emancipation, the trial judge noted that
R. had worked during most of the time he attended college, including full-time employment in 2001. The judge stated that
R. should be "applauded for his persistence" in completing college. The judge further noted that, as long as R. was "making headway" towards graduating from college, he was not emancipated.
Regarding R.'s college expenses, the judge concluded that defendant would have paid for R.'s college expenses had he still been living with the family. This was based upon uncontraverted testimony in the plenary hearing that both parties had paid for J.'s college expenses. Moreover, in correspondence between the parties, defendant had acknowledged that Rutgers might be a good school for R. to attend.
The judge addressed the factors in Newburgh v. Arrigo, 88 N.J. 529, 543-44 (1982). Based upon his analysis of those factors, the trial judge concluded that defendant should be responsible for all of R.'s college expenses, and that defendant clearly had the ability to pay those expenses given the value of his financial assets.
The judge further awarded plaintiff payment of certain sums to which she was entitled under prior pendente lite orders, as well as equitable distribution payments pursuant to the divorce judgment. The judge expressly rejected defendant's assertion of laches against these claims, finding that defendant had never brought a motion pursuant to Rule 4:50 to be relieved of those pendente lite obligations, and that equitable distribution obligations were not subject to such a defense. The judge awarded plaintiff a total of $19,453, plus interest, on these outstanding obligations.
The judge also ordered defendant to provide proof that he had life insurance policies in place for the benefit of plaintiff and the parties' unemancipated son, D. In the event defendant was unable to provide proof of such life insurance, the judge ordered that $195,500 of defendant's assets would be held in trust to provide funds in the event of his death. Defendant had argued that our remand in November 2000 did not require the trial judge to address the issue of life insurance. Nonetheless, the judge noted that the parties' agreement incorporated into their judgment of divorce created such an obligation and, therefore, the judge ordered enforcement.
Finally, the judge ordered defendant to establish two trust accounts: the first in the amount of $150,000 "as security to ensure that there is a fund to pay the alimony, should [d]efendant default, and a fund to pay the child support which is to be recalculated for . . . [D.], who will continue to be unemancipated indefinitely"; and the second to be comprised of "all of [d]efendant's assets," from which defendant would be permitted to "request of the trustee advances of funds for his personal needs . . . ." The judge added the proviso that, if defendant demonstrated that he could remain current in his support obligations, he would be entitled to apply to the court to have the first trust terminated.
In a supplemental decision, the trial judge addressed the amount of defendant's child support arrears based upon the change in R.'s emancipation date. The judge then issued an order on August 17, 2007, to which he attached a spreadsheet determining defendant's child support and alimony arrears to be $266,430.70. In imputing income to defendant for the purpose of determining his child support obligation, the judge found that defendant's financial portfolio ranged in value from $700,000 in 1996 to $1.2 million in 2007. The judge applied interest rates set by the "Lehman aggregate bond index" to the annual value of defendant's portfolio in each of those years.
On appeal, defendant raises the following arguments for our consideration.
PARAGRAPH 1 OF THE JULY , 2007 ORDER SHOULD BE REVERSED AS THE TRIAL COURT ERRED IN ITS RULING THAT THE PARTIES' CHILD [R.] WAS EMANCIPATED AS OF AUGUST 21, 2004.
PARAGRAPH 2 OF THE JULY , 2007 ORDER SHOULD BE REVERSED, AS THE TRIAL COURT ERRED IN ITS RULING THAT THE DEFENDANT-APPELLANT REIMBURSE THE PLAINTIFF-RESPONDENT $87,897.76 PLUS INTEREST.
PARAGRAPH 4 OF THE JULY , 2007 ORDER SHOULD BE REVERSED AS THE TRIAL COURT ERRED IN ITS RULING WITH REGARD TO THE RECALCULATION OF CHILD SUPPORT FOR [R.] AND [D.].
PARAGRAPH 5 OF THE JULY , 2007 ORDER SHOULD BE REVERSED AS THE TRIAL COURT ERRED IN ORDERING THE DEFENDANT-APPELLANT TO PAY THE SUM OF $19,453.00 PLUS INTEREST.
PARAGRAPH 8 OF THE JULY , 2007 ORDER SHOULD BE REVERSED AS THE TRIAL COURT ERRED IN ITS RULING REQUIRING THE DEFENDANT TO PROVIDE PROOF OF LIFE INSURANCE.
PARAGRAPH 9 OF THE JULY , 2007 ORDER SHOULD BE REVERSED AS THE TRIAL COURT ERRED IN ITS RULING REQUIRING THE CREATION OF A LYNN TRUST.
PARAGRAPH 11 OF THE JULY , 2007 ORDER REQUIRING THE DEFENDANT-APPELLANT TO PAY A $212,400 SANCTION SHOULD BE REVERSED BECAUSE IT IS OUTSIDE THE SCOPE OF THE NOVEMBER 22, 2000 APPELLATE DIVISION DECISION.
PARAGRAPH 12 OF THE JULY , 2007 ORDER SHOULD BE REVERSED AS THE TRIAL COURT ERRED IN ITS RULING EXPANDING THE PREVIOUSLY ORDERED TRUST AS OUTSIDE THE SCOPE OF THE APPELLATE DIVISION'S RULING OF NOVEMBER 22, 2000.
Having reviewed the record in light of these contentions and the applicable law, we conclude that defendant is entitled to a remand on two issues: (1) the trial judge's inclusion of alimony in his calculation of defendant's support arrears; and (2) the imposition of $212,400 in sanctions for failure to comply with the 2001 discovery orders. On all other issues we affirm substantially for the reasons set forth by the trial judge in his decisions placed on the record on June 20 and 21, 2007, as well as in his orders of July 24 and August 17, 2007.
Regarding R.'s emancipation date of August 21, 2004, we are satisified that the trial judge properly applied the so-called "Newburgh factors" in modifying R.'s date of emancipation from the 1996 date we had reversed in our earlier opinion to the date of his graduation from Kean University. Newburgh, supra, 88 N.J. at 545. Prior to that graduation date, R. remained within the "'sphere of influence'" of his mother. Filippone v. Lee, 304 N.J. Super. 301, 308 (App. Div. 1997) (quoting Bishop v. Bishop, 287 N.J. Super. 593, 598 (Ch. Div. 1995)).
While attending college, R. lived either at home, in a dormitory or in off-campus housing, all of which plaintiff paid for. Beyond R.'s own contributions to his college expenses through his part-time and temporary full-time employment, plaintiff paid for the majority of his college expenses. Thus, given R.'s need for financial assistance in attending college and his ongoing dependence upon his mother for support, both parental and financial, the judge properly concluded that R. was not emancipated until he finally achieved his goal of college graduation.
We also concur with the trial judge's ruling that defendant reimburse plaintiff for all of the out-of-pocket expenses she incurred in meeting R.'s college costs. Plaintiff presented documented proof of those expenses. The judge properly found that, as a "financially capable parent," defendant had the obligation to reimburse plaintiff for those expenses. Newburgh, supra, 88 N.J. at 544. As plaintiff testified, she paid those expenses primarily from the support she received from defendant, through family loans and by incurring substantial credit card debt; the trial judge addressed the Newburgh factors in reaching this determination as well. The judge found that defendant clearly had the ability to pay these expenses in light of the value of his substantial assets, which, as noted, ranged between $700,000 in 1996 and $1.2 million in 2007.
The pendente lite expenses that defendant was required to reimburse to plaintiff had been specifically ordered on July 3, 1989, at which time defendant was mandated to pay all roof expenses on the marital home and also was permitted to withdraw $20,000 from marital assets on the condition that he pay one-half of that amount to plaintiff.
Subsequently, pursuant to the terms of the parties' agreement in their judgment of divorce, defendant was required to pay to plaintiff certain sums in equitable distribution. The trial judge painstakingly calculated the amount of sums due and owing under both the pendente lite order and the judgment of divorce in his July 24, 2007 order. We find those calculations to be based upon substantial credible evidence in the record, and therefore will not disturb them on appeal. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).
We are also satisfied that the trial judge properly rejected defendant's assertion of laches against these claims. "Laches is an equitable principle applied to a party who, without explanation or excuse, delayed in asserting a claim now stale. The delay must be unreasonable under the circumstances, and must create prejudice to the party asserting the delay." Talcott Fromkin Freehold Assocs. v. Freehold Twp., 383 N.J. Super. 298, 320 (App. Div. 2005). The key factors in assessing a defense of laches are the length of and reasons for the delay, as well as any change in either party's situation in the interim. Knorr v. Smeal, 178 N.J. 169, 181 (2003).
Here, the trial judge found that defendant never made any application for relief from his pendente lite obligations. Regarding his equitable distributions obligations, defendant asserted he had made those payments, but was unable to provide any supporting documentation. When defendant moved to have R. declared emancipated in 1999, plaintiff cross-moved for various forms of relief, including reimbursement of these particular expenses. Following our remand, which expressly contemplated a review of these reimbursement claims, further proceedings were substantially delayed as the result of both parties' illnesses.
Moreover, plaintiff during this time was also preoccupied with the responsibility of paying for R.'s college expenses while continuing to care for the parties' unemancipated adult son, D. Under these circumstances, we conclude that the trial judge correctly found defendant's laches claim to be without merit.
Defendant's issues relating to his life insurance obligation, and the creation of two trusts to ensure his support obligations in the event of his default thereon, are without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E). Once again, we affirm substantially for the reasons set forth by the trial judge which we find to be "adequately supported by [the] evidence . . . ." R. 2:11-3(e)(1)(A).
We therefore turn to the two issues on which we have determined that a remand is necessary.
First, regarding the trial judge's calculation of defendant's support arrears, we note that in our prior decision, we ordered that if R. were determined to be unemancipated, the issue of child support should be revisited and "revis[ed]." Hikes v. Hikes, supra, slip op. at 12. The trial judge, however, included alimony in his calculations in arriving at the arrears figure of $266,430.70. Our prior remand did not address any issue related to alimony; nor did plaintiff seek alimony arrears during the plenary hearing. The trial judge concluded that defendant "didn't pay what he should have paid to begin with as far as alimony [was] concerned." This finding does not appear to be supported by any evidence in the record. Therefore, we conclude that a remand is required for this reason.
We note that defendant did not include the August 17, 2007 order in his notice of appeal filed on August 24, 2007, nor has he addressed it in his brief. "Any issue not briefed is usually deemed waived." Otto v. Prudential Prop. & Cas. Ins. Co., 278 N.J. Super. 176, 181 (App. Div. 1994). However, "since this circumstance is a part of the record and it demonstrates that plaintiff [may] receive an unfair windfall . . . , we will consider it on appeal in order to prevent an unjust result." Ibid. We "may, in the interests of justice, notice plain error not brought to the attention of the trial or appellate court."
Defendant's counsel addressed the support arrears issue in a letter to the trial judge on February 6, 2008, which he appended to his reply brief. We are unaware whether this issue has been resolved and, therefore, conclude that it must be addressed as part of the remand ordered herein.
Our earlier remand did not specify the basis on which defendant's income should be determined. The trial judge imputed income to defendant based upon income derived from his asset portfolio. The judge afforded the parties an opportunity to make any corrections to the calculations set forth in his supplemental order of August 17, 2007; rather than submit any such corrections, however, defendant filed his notice of appeal. Now, defendant's principal argument on this point is that the trial judge erred in imputing income to him from his investments. We disagree.
It is well settled that a judge may appropriately impute income to an obligor spouse based upon his or her investments in income-producing equities. Miller v. Miller, 160 N.J. 408, 423-25 (1999). We reject defendant's argument that he was not a "sophisticated investor" as was the obligor in Miller and that, therefore, the trial judge's imputation of income to him was excessive; defendant relies upon Overbay v. Overbay, 376 N.J. Super. 99, 108 (App. Div. 2005) in support of this argument.
In response we note, first, defendant's testimony that he was an intelligent investor, who "kn[e]w how to invest," and "accumulate wealth"; in fact, defendant's own documentation showed that his investments grew to a value of over $1.2 million at the time of the plenary hearing, and that defendant supported his lifestyle by the income generated through those investments.
Secondly, defendant's reliance on Overbay is misplaced. There we held that: when a spouse with underearning investments has the ability to generate additional earnings -- without risk of loss or depletion of principal -- but fails to do so, it is fair for a court to impute a more reasonable rate of return to the underearning assets, comparable to a prudent use of investment capital. [Id. at 111.]
This is precisely what the trial judge did when imputing income to defendant, as evidenced by the spreadsheets appended to his August 17, 2007 order.
In sum, the issue of defendant's support arrears is remanded for review and clarification of both his child support and his alimony payments in order that an accurate support arrearages figure may be determined. In making that calculation, the judge on remand may impute income to defendant in the manner employed by the trial judge here.
Finally, we address the sanctions issue. As noted, Judge Derman had issued two orders in 2001, the first on April 30, 2001 requiring defendant to provide his tax returns from 1996 through 2000, as well as a current W-2 and a CIS; and a second order on August 7, 2001, ordering defendant to provide that discovery by September 1 and imposing a $100-per day sanction in the event of his non-compliance. Following their issuance, however, those orders apparently lay dormant; they certainly were not in effect during the suspension of this matter from December 22, 2004 to July 18, 2006, due to the parties' health situations.
Moreover, the record is unclear as to whether, and if so when, defendant did, in fact, comply with production of the ordered discovery. Certainly plaintiff was in possession of some financial documentation from defendant, as she was able to present the judge with evidence of defendant's equities portfolio at the time of the plenary hearing.
It appears the trial judge premised his sanctions order primarily upon his unfavorable assessment of defendant's credibility. While we do not necessarily take issue with that assessment, we nonetheless conclude that the trial judge failed to address these other factors. Therefore, we reverse that part of the trial judge's order of July 24, 2007 imposing sanctions totaling $212,400 upon defendant for non-compliance with the 2001 discovery orders, and remand that issue for further review.
Affirmed in part, reversed and remanded in part for further proceedings in conformance with this opinion.
© 1992-2009 VersusLaw Inc.