On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Atlantic County, Docket No. FM-01-152-06P.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Gilroy and Chambers.
On January 9, 2007, the Family Part issued a dual judgment of divorce (JOD) dissolving the marriage between plaintiff Debra Amir and defendant Yehuda Amir. Defendant now appeals arguing that the trial court committed reversible error in: (1) determining the amount of equitable distribution due plaintiff*fn1; (2) failing to find that the parties reached an enforceable settlement agreement on January 17, 2006; and (3) denying his recusal motion. Defendant's arguments come before us as three separate appeals which we consolidate here for the purpose of resolution.
After reviewing the record before us, and mindful of prevailing legal standards, we reject defendant's arguments pertaining to the existence of a settlement agreement and on the question of judicial bias. We are satisfied, however, that the court erred in valuing and distributing the marital assets. We therefore reverse the award of equitable distribution, and remand for further proceedings consistent with this opinion.
We derive the following facts from the evidence presented before the trial court.
The parties were married on November 9, 1991. They lived in a townhouse located in Ventnor that defendant had purchased in 1988 for $75,000. Before the marriage, plaintiff was a real estate sales agent in her father's business; defendant owned and operated a retail store on the Atlantic City boardwalk. After the marriage plaintiff worked fifteen to twenty hours per week as a sales clerk in defendant's store. Defendant's responsibilities included managing the store's finances and inventory, and supervising the summer employees; he also worked as a sales clerk.
In the summer months, the store would be open from 9:00 a.m. to at least 10:00 p.m., occasionally staying open until midnight. In the early years of their marriage, the parties spent most of their time working. The business operated on a seasonal cycle. In the spring and fall, the store closed between five and seven in the evening; in the winter, it only opened when the weather permitted.
The parties' first child (a boy) was born in March 1993. Plaintiff returned to work full-time at the store soon thereafter, bringing the baby to work with her. She received a regular paycheck for about one year. At the end of this year, although she continued to work, defendant stopped paying her.
In the summer of 1993, the parties purchased a house in Longport for $109,000. Defendant testified at his deposition that he paid $30,000 as a down payment. At trial, he testified that he only paid $10,000 as a down payment with money he earned or acquired before the marriage. The parties secured a $135,000 mortgage to finance the balance of the purchase price, and to pay off a $55,000 to $65,000 mortgage that was encumbering the Ventnor townhouse. The monthly payment for the $135,000 mortgage was $1,200. They rented out the townhouse for residential use.
The parties' second child (a girl) was born in May 1995. Plaintiff continued to work at the store during the summer after her birth; the two children were initially cared for by a nanny; the parties eventually assumed all of the child-care responsibilities, with each parent alternating between child-care and store-work.
Plaintiff gave birth to twins (a boy and a girl) in April 1997. Because she was sick in the early part of the pregnancy, she did not work much in the store. She returned to the store full-time after she gave birth to the twins. Although she still worked at the store, she viewed her primary role as caring for the family and the house. Her responsibilities at the store included purchasing supplies and handling "the legal aspects" of the business. She had nothing to do with the finances, however. She testified at trial that because defendant kept separate bank accounts, she did not know how much income the store generated or how much defendant earned personally.
Sometime in either 1997 or 1998, plaintiff obtained a real estate broker's license. Defendant purchased another boardwalk store around the same time in 1998. Plaintiff worked in that store as well. In 2002, plaintiff stopped working regular hours at the stores. It was also during this time that the parties' relationship as husband and wife began to deteriorate.
Their marital difficulties also affected their relationship at work. The tension between plaintiff and defendant became intolerable. Specifically, plaintiff complained that the stores' employees were disrespectful and even berated her on occasions. According to plaintiff, the employees acted this way because they saw how defendant treated her.
Plaintiff spent a few months at home with the children after she stopped working at the stores. Thereafter, she began selling real estate again at her father's business. That did not last long, however, and she soon returned to being a full-time homemaker. In 2005 plaintiff obtained a real estate sales position with a company called Sellstate Real Estate. As of the summer of 2006, plaintiff was still employed by Sellstate.
In February 2006, the turmoil in the Amir family reached critical levels. Not only were the parties not getting along, but the children were also drawn into the discourse. Unable to find a resolution, plaintiff decided to leave her marital residence in Longport, and move into a winter-rental apartment in Margate. Because the lease on this property was due to expire on May 30, 2006, she decided, with defendant's consent, to move into the Ventnor townhouse on June 1, 2006. After some initial delay in relocating the occupants of the townhouse, plaintiff moved on July 1, 2006.
When plaintiff and the children moved in, the townhouse was in a deplorable state of disrepair. Defendant refused to pay for the needed repairs, however, telling plaintiff to get the money from her father. Unwilling to involve her father, and unable to hire a contractor, plaintiff decided to repair the townhouse herself. This proved to be short lived; after a short time, her father intervened and hired a contractor. As of August 2006, plaintiff's father had paid approximately $15,000 to offset the cost of repairs; more work is required to complete the project.
The court's equitable distribution award was predicated on defendant's businesses. In order to address this issue, we must first review the evidence presented with respect to defendant's premarital, business-related activities.
Defendant was born in Israel. He came to the United States in 1982, when he was twenty-two years old. He brought with him approximately $3,000, and spent about $1,000 traveling across the country. In May 1982, he began living in Atlantic City with a man named Ezra Kraim and his family. He worked as an employee in Kraim's retail store on the Atlantic City boardwalk from 1982 to 1986.
According to defendant, Kraim paid all of his living expenses, allowing him to save all of his income. Defendant's social security statement shows, however, that he had no income prior to 1986, and only $1,000 for the entire year of 1986.
Defendant and Kraim formed a corporation called Casino Gifts Corporation in 1986. That corporation operated a retail store in the 2600 block of the Atlantic City boardwalk, paying $175,000 annual rent. In May 1989, defendant formed his second business called Souvenir City, Inc.; he was the sole shareholder of that corporation.
Also in May 1989 defendant purchased a boardwalk commercial unit designated R-21 in the Ocean Club Condominium complex (Ocean Club). The purchase price was $350,000. He paid an initial payment of $50,000, and the seller financed the $300,000 balance by taking back a mortgage. The monthly mortgage payment was $1,200. When asked at his deposition to identify the source of the $50,000 payment, defendant stated that it came from a combination of his personal savings, and moneys lent to him by his sister and mother.
Defendant operated a retail store in the R-21 unit that he called Souvenir City. The business sold small gifts and beach items. The amount of sales generated by Souvenir City is uncertain because defendant did not keep sales records. Defendant testified that he destroyed the cash register tapes "[b]ecause they don't mean anything. . . . Every day there's a bunch of mistakes."
In addition to Souvenir City at R-21, defendant obtained the exclusive rights in the Boardwalk Commercial Units of the Ocean Club to operate a retail store selling souvenirs and similar items. Defendant's rights were subject to the rights of any pre-existing retail stores engaged in similar business activities within the Ocean Club. The tenant in unit R-20 was one of those businesses with prior conflicting rights. In response, defendant's deed to R-21 provided that when the R-20 tenant's lease expired, defendant would have the exclusive right to operate a store in R-20. Specifically, the deed provided that:
Purchaser/Unit Owner acknowledges that other rights have been granted to commercial stores in the Ocean Club and understands and agrees to this use. Additionally, Purchaser/Unit Owner acknowledges that there is an existing tenant of Unit R-20 of the Ocean Club and that certain exclusive uses stated may conflict with certain nonexclusive rights of the tenant of R-20.
Upon the expiration of this lease Agreement these rights will then become exclusive to Purchaser/Unit Owner.
In defendant's view, this provision created an option to buy R-20 when the tenant vacated it. As defendant explained, when he purchased R-21, he also wanted to purchase R-20; because the unit was occupied, however, the seller would not sell it to him. By way of compromise, he and the seller agreed that when the tenancy ended, defendant would acquire R-20. Thus, in defendant's opinion, the deed conveying title to R-21 also included an option to buy unit R-20.
In December 1989 defendant and Kraim dissolved Casino Gifts Corporation, and stopped renting and operating the store on the 2600 block of the boardwalk. After equally dividing the inventory, defendant moved his share to the Souvenir City store located at R-21. In June 1992, after plaintiff and defendant had married, the R-20 tenant vacated the premises, and defendant purchased the unit for $140,000.
Defendant structured the purchase as follows: (1) he paid the seller $15,000; (2) he obtained a purchase money mortgage from a bank in the amount of $110,000; and (3) he gave the seller a second mortgage for $10,000. His monthly mortgage payments were approximately $1,200. At trial, defendant testified that the $15,000 initial payment came from money he had "way before" he married plaintiff.
Instead of operating a store at R-20, defendant leased the unit to a shoe store. Souvenir City, Inc. received the rent, which in 2006 was between $53,000 and $54,000 per year. Pursuant to the lease, which was set to expire in 2010, the rent would increase three percent each year. Defendant testified, however, that he intended to forego the increase due in 2007 because the tenant was not doing well financially.
According to defendant, the tenant paid the utilities for R-20 and performed everyday maintenance; defendant paid taxes (between $65,000 and $67,000), condominium fees ($18,000), insurance ($1,700), and mortgage ($14,400). All of these figures are estimates based on defendant's testimony of the unit's expenses for 2005. Defendant did not provide documentary evidence to support his testimony.
In 1998, defendant purchased unit R-22 at Ocean Club. This was his third condominium unit at this complex. R-22 was in foreclosure, and defendant acquired title at a sheriff's sale. He assumed payments on a $44,000 mortgage, and paid $135,000 in back taxes. The source of these funds, amounting to $179,000, remains unclear from this record.
According to plaintiff, defendant borrowed $60,000 from her father. Defendant testified that he obtained $300,000 by mortgaging a piece of property that plaintiff's father had given him. From this $300,000 he gave plaintiff's father $165,000, paid off the $135,000 tax liability, and placed a $135,000 mortgage on R-22. The monthly mortgage payment due from R-22 was about $1,600. Defendant operated a retail store at R-22 selling merchandise slightly different from the inventory kept at R-21.
In December 2005, using only the money he had earned from the stores, defendant paid off the mortgages that encumbered all three commercial properties. For each property he made a lump-sum payment of $6,000, for a total pay-off amount of $18,000.
As of the time of trial in August 2006, the parties had not filed income tax returns for 2005. The only tax return that the court considered was the parties' joint 2004 return. Plaintiff testified, however, that her gross income for 2005 was ...