September 4, 2009
CATHERINE ROMANIA, F/K/A CATHERINE ROMANIA MATTERA, PLAINTIFF-RESPONDENT/CROSS-APPELLANT,
NICHOLAS A. MATTERA, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Passaic County, Docket No. FM-16-1470-99.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 18, 2008
Before Judges Graves and Grall.
Defendant Nicholas A. Mattera appeals and plaintiff Catherine Romania cross-appeals from a dual final judgment of divorce. Mattera challenges the trial court's determinations on custody, alimony, child support and equitable distribution and alleges bias on the part of the judge that infects the entire judgment. Romania claims error related to alimony, equitable distribution, counsel fees, denial of her request for prejudgment interest on her share of Mattera's business and dismissal of her tort claim seeking damages for alleged malicious prosecution.
The protracted litigation that lead to this appeal commenced seventeen years after the marriage and when the parties' five children were age fourteen, eleven, nine, seven and four. When the judgment that is the subject of this appeal was entered the children were age twenty-one, eighteen, sixteen, fifteen and eleven. Because the nature of that litigation is relevant to several issues raised on appeal, it is set forth in detail.
Romania filed the complaint for divorce on May 10, 1999, two days after she filed a complaint pursuant to the Prevention of Domestic Violence Act, N.J.S.A. 2C:25-17 to -35. Also on May 10, Mattera filed a complaint alleging that Romania committed an act of domestic violence against him. The parties agreed to dismiss their respective domestic violence complaints and submitted a consent order requiring Mattera to leave the marital residence, assigning primary residential custody of the children to Romania, specifying Mattera's parenting time and designating a psychiatrist and a psychologist to recommend a custodial arrangement that would be in the best interest of their five children. In July 1999, Mattera answered Romania's complaint for divorce and filed a counterclaim for divorce. On July 23, 1999, Romania moved for a change of venue, defendant objected and the application was denied.
On July 26, 2000, Mattera filed three complaints charging Romania with the disorderly persons offense of interference with custody, N.J.S.A. 2C:13-4a(4). After those complaints were dismissed, Romania amended her divorce complaint to include a count for malicious prosecution.
Trial on custody and parenting time commenced on September 24, 2001. At the outset of that proceeding, the parties amended their respective pleadings to allege grounds for divorce based on eighteen months' separation, N.J.S.A. 2A:34-2d. They were both granted a divorce on that ground, and trial on custody commenced. Before that proceeding concluded, the trial court granted the parties' request to refer the financial issues in the case to mediation and, on January 7, 2002, entered a dual judgment of divorce.
An amended judgment fixing custody and parenting time was entered on April 12, 2002. Romania appealed, and this court affirmed the trial court's order, which included a provision permitting review of the arrangement after one year "without need to demonstrate a change of circumstances," which was well-underway when the appeal was decided. Romania v. Mattera, No. A-5026-01 (App. Div. Feb. 18, 2004) (slip op. at 17, 19).
The review of custody was undertaken on the basis of orders to show cause filed by both parties. The trial court directed updated evaluations by the psychiatrist and psychologist previously selected by the parties. Mattera filed a motion seeking recusal of the judge, which the judge denied. This court granted defendant's motion for leave to appeal and summarily affirmed the judge's denial.
In September and October 2003, the parties filed separate complaints charging each other with offenses - harassment, N.J.S.A. 2C:33-4, and interference with custody, N.J.S.A. 2C:13-4a(4). Those complaints were consolidated with open issues in the divorce proceedings by order entered in December 2003. Parenting time for one of the children was modified pending the hearing to review custody on Romania's application filed by way of order to show cause.
The custody hearing commenced on October 4, 2004. During the course of that hearing, the Division of Youth and Family Services investigated an incident involving Romania and one of the children.
The trial on the financial issues ancillary to the divorce commenced on July 25, 2005 and was scheduled to resume on September 13, 2005, but was postponed because Mattera filed a petition for bankruptcy on September 9, 2005. The bankruptcy court denied Romania's motion to dismiss that petition on February 6, 2006, but granted relief from the automatic stay and on March 21, 2006 entered an order expressly authorizing the trial court to determine all issues including equitable distribution.
Trial resumed on April 24, 2006. Testimony was taken on eight days, and the judge issued a written decision on September 12, 2006. Mattera raised objections to and requested clarification of the opinion, and the amended final judgment from which this appeal is taken was entered on December 22, 2006.
The following facts are pertinent to alimony and child support. Romania and Mattera married on October 25, 1981. Mattera was twenty-six years old, and Romania was twenty-four. They were both licensed to practice law.
Romania was working as an associate in the trusts and estates department of a New Jersey law firm and earning approximately $30,000 per year. She returned to the firm after the birth of the parties' first child and, while working, completed her studies and received an LLM in taxation. She did not return to work after the parties' third child was born. Although she planned to work part-time, the firm decided against part-time employment. She completed work she had undertaken for particular clients from the office of the law firm that Mattera established, after working for several law firms.
Romania became a partner in Mattera's firm. As she explained it, the arrangement was established so that she could pay employment taxes on a minimal salary, but she was not really working. Mostly from home, she did work her husband asked her to do and, from time-to-time, wrote wills. She resigned from the firm in 1996, and the partnership was dissolved in 1997. Romania took a part-time job with a law firm in 2002, where she worked about ten hours per week at $40 per hour. By July 25, 2005, she was working about eighteen hours a week for $42.50 an hour and, for matters she brought to the firm, receiving ten percent, presumably of the firm's fee, for real-estate closings and twenty percent on other matters. In July 2005, Romania did not view full-time employment as an option given the children's ages and need for supervision and the absences that would be required by her participation in this litigation and involvement with the children.
As noted above, Mattera worked for several firms before starting his own practice. Mattera did the legal work and supervised any per-diem attorneys he retained. According to him, up until the time she commenced the matrimonial action, Romania did the firm's administrative work, with the exception of payroll which she did for only a short time. Mattera did not have a personal checking account; he used the business account for personal expenses and did not draw a salary.
Review of the tax returns admitted into evidence at trial and included in the appendices provided on appeal and Mattera's testimony discloses the following about income from the practice:
Gross Receipts*fn1 (before personal income tax)Net Business Income
Mattera reported the net amount as personal income on his federal tax returns. To illustrate, in 1998 Mattera paid tax on business income in the amount of $699,752 plus dividends of $2173, taxable interest of $7865, and taxable refunds of $24,660, minus $534 capital loss, a total of $733,916. The federal tax was $272,687 and the state tax was $44,276, a total of $316,963, approximately forty-five percent of the income. Thus, in that year personal income net of taxes derived from net business income was approximately $384,864.
Plaintiff obtained "standard of living reports" from two accountants. Kalman A. Barson calculated that disposable income (income after taxes) for 1998 was higher than $384,864 - $505,989. He derived that figure by deducting taxes and adding to business income net of expenses the following: tax exempt interest; taxable interest and dividends; depreciation expense deducted from net business income for tax purposes; a "SEP" contribution; and over $20,000 for personal expenses paid by the business. And, he concluded that Mattera's net disposable income after taxes in 1998 was $505,989 or $42,166 per month. Based on information provided by plaintiff, and his review of bank records and credit card statements, Barson estimated that in 1998 the parties spent $585,991 or $48,833 per month.
Barson explained the discrepancy between income and spending as follows:
One of the problems we have with a financial life that's as complex as the Matteras' is that it's virtually never going to reconcile exactly, there are always differences. Differences can come about from monies being used in one year that were from savings and another year, it could be from a checking account. I've seen checking accounts that end one year with let's say $100,000 and the following year with almost nothing, so the checking account, even [if] it's not considered savings, fueled a lifestyle - a cash flow in one year of proportion. There are many possibilities, especially when there's only one year. They tend to level out. If I were to do five, six, seven years, which I'm not recommending, they would tend to level out, but any one year could have variations.
He estimated monthly spending in 1997 at $41,901. His estimate of disposable income for 1997 was $486,876 or $40,573 per month.
Marshall A. Morris, another CPA retained by plaintiff, estimated total disposable income for 1997 at $486,878 or $40,573 per month and for 1998 at $431,518 or $35,960 per month. Morris estimated monthly expenditures for those years at $41,901 for 1997 and $37,650 for 1998.
Plaintiff presented evidence that business income should have been higher and fluctuated. In the opinion of Seymour Rubin, the expert appointed by the trial court to assess the value of defendant's law practice, Mattera's ratio of expenses to revenue was not comparable to those of other similar firms, which were about fifty-five percent of gross receipt for expenses to forty-five percent for income net of expenses.
Mattera's accountant calculated the law firm's ratio of income to expenses as follows: in 2001, 40 to 60; 2002, 27 to 73; 2003, 5 to 95; 2004, 21 to 79. The ratio in 1996 was 70 to 30.
On cross-examination, plaintiff's attorney asked Mattera's accountant to predict the firm's net income for 2006 based on the figures for January and February of that year, showing gross income of $224,215.43 and expenses of $94,914. Although the accountant indicated that he would ask his client what cases he expected to close during that year in order to give the estimate, he performed the calculations assuming the same revenue and expenses for six more two-month periods and responded that the result would be net income of $775,808.
In determining the appropriate amount of alimony and child support, the trial court concluded that Mattera's net income in 2006 would be approximately $778,000. The trial court observed that Romania acknowledged that she could earn $54,000 per year in her present position.
Romania's case information statement lists monthly expenses of $38,051 for herself and the parties' five children. Among the budget items included are $12,500 for savings, $1275 for household maintenance, exclusive of lawn care and snow removal, $1300 for furnishings and equipment, $3500 for domestic help, $1000 for vacations and $2200 for tax reserve. She explained that the figure for savings is one-half of what the parties saved during the marriage. At the time of trial, two of the children were in college, one living at home and one on campus.
Mattera's case information statement lists monthly needs in the amount of $14,000.
The trial court directed Mattera to provide the following support for Romania and the children: permanent alimony, in the amount of $12,000 per month for two years and $10,000 per month thereafter; child support of $1000 per month per child for the four children living at home and $500 per month for the child living on campus; health insurance for the children; and two-thirds of the college expenses for the children.
The parties stipulated that the value of the marital residence, which has no mortgage, is $627,000 and the value of Mattera's law practice is $1.8 million, from which Romania's share is $720,000. In addition, the parties had significant investments held in various accounts, with an approximate value in excess of $2,000,000 when this litigation commenced and an approximate value of $950,000 when the judgment was entered.
The trial court directed an equal division of the assets, which is subject to a series of debits and credits. The most significant being a credit to Romania for one-half of $330,000, which was awarded to provide her share of the "three hundred plus thousand dollars" Mattera acknowledged withdrawing from his profit-sharing account.
Mattera sought but was not granted a credit for funds Romania withdrew from accounts in her name after the divorce complaint was filed in the approximate amount of $540,000. Romania contended that she used some of the money for major repairs on the marital residence and the remainder to pay litigation expenses she incurred in excess of $670,000 at the time of trial. In elaborating on its decision to deny a credit to Mattera, the trial court explained that the effect of its determination was that Mattera's $270,000 share served as a contribution in that amount to Romania's litigation expenses. The trial court also denied Mattera's request for a credit for funds she spent to repair the residence, which she contended increased the market value of the marital residence, and a request for checks that she said Mattera received but did not deposit in his business account.
The trial court directed additional awards: a credit to Romania for one-half the tax she paid on joint assets in 1998, 1999 and 2000, approximately $20,000 according to the calculations made by Romania's accountant; a credit to Romania for one-half the value of a Mercedes in Mattera's possession; and a credit to Mattera in the amount of $7500, which was given to return the full value of a deposit he made to an escrow account.
The trial court denied requests for other credits. Mattera contended that there should be an adjustment in the amount of an insurance check issued in his name for damage to the Mercedes resulting from an accident that occurred while one of the children was driving the car, which was then in Romania's possession. Romania indicated her intention to waive her interest in the Mercedes and noted that she had used the check to purchase another car after Mattera took the Mercedes from the repair shop. Romania was denied a share of a tax credit of about $84,000 that Mattera carried and applied to his tax for the following year.
The trial court dismissed the parties' municipal complaints against one another and Romania's claim for damages based on her allegation of malicious prosecution.
Mattera argues that the judge demonstrated bias that had an impact on the trial court's discretionary determinations on custody and parenting time, alimony and child support and equitable distribution. We have reviewed the record in its entirety and find no support for that conclusion.
It is true that the judge expressed, with unmistakable clarity, his concern that the children were endangered by their parents' hostility for one another and the manner in which both conducted this litigation, not only in the Family Part but in the municipal court and in bankruptcy court. Those comments reflected what all of the professionals who made recommendations on custody and parenting time observed - the children were suffering by the inability of both of their parents to set aside their differences in the interest of their children.
The judge's comments were directed at both parties, not one. That is true with respect to matters involving the children and matters involving finances. The judge was obligated to and did make credibility findings.
The judgment concerning custody and parenting time is based on findings of fact that are adequately supported by the evidence. R. 2:11-3(e)(1)(A). Accordingly, we affirm and add only brief comments.
We have not set forth the relevant facts because they are detailed in this court's opinion on the prior appeal from the initial custody determination and in fourteen pages of the written decision issued by the judge who considered the developments since that time before entering this judgment. One expert who offered an opinion described the children's situation as one of living in a "war zone" during the course of this litigation. That description, as indicated by the torturous procedural history, is born out by the record.
In any event, our review of a custody determination is limited. We must affirm if "the findings made could reasonably have been reached on sufficient credible evidence present in the record." Beck v. Beck, 86 N.J. 480, 496 (1981) (noting that this standard of review applies in custody cases and to a trial court's findings on expert testimony) (internal citations and quotations omitted). We may not undertake an "independent analysis of the trial court record." Id. at 497.
On more than one occasion, this court has observed:
The trial judge had the advantage of the personal appearance of the parties and of discussions with the children; additionally he had the wisdom which comes from an accretion of experience in dealing with such matters. Particularly in a case of this nature, is it true that general principles of law do not decide concrete cases, as has been aptly said. Each matter must be decided on its own merits with the best interests and welfare of the children as the paramount consideration. To this principle, even parental rights must yield. [Palermo v. Palermo, 164 N.J. Super. 492, 498 (App. Div. 1978) (quoting In re the Sale of Land of Flasch, 51 N.J. Super. 1, 18 (App. Div.), certif. denied., 28 N.J. 35 (1958)).]
In this case involving complex relationships between the siblings, the parents and the children and the parents, it would be especially inappropriate for us to assume that we have the capacity to fashion a better custodial arrangement than the one put in place by the trial court after conscientious consideration of the difficult circumstances.
This court reviews a trial judge's determinations about equitable distribution for abuse of discretion. Borodinsky v. Borodinsky, 162 N.J. Super. 437, 444 (App. Div. 1978). Thus, we do not disturb decisions that have reasonable support in the record as a whole and are consistent with the law. See Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978). The question is whether the ultimate division is clearly unfair or unjustly distorted by a misconception of law or findings of fact that are contrary to the evidence. The task [requires this court to] balanc[e] the need for a check on unbridled discretion in the trial court against affording a trial de novo in this court. An equitable distribution will be affirmed even if this court would not have made the same division of assets as the trial judge. [Ibid.]
The objections raised on appeal are to the judge's award of credits. The only claim that has sufficient merit to warrant comment is the judge's award of credits for funds withdrawn from accounts by both parties during the pendency of the litigation.
Viewed in isolation, the grant of a credit to Romania and the denial of a credit to Mattera appears unfair. But these determinations cannot be viewed that way. Romania testified that she used the funds she withdrew to pay her litigation costs and make repairs to the marital residence. She sought an award of counsel fees from Mattera and a credit for money she spent to fix the house. The judge denied both of her requests, and, in addressing the parties' numerous objections to his written decision, the judge observed that Mattera's share of the $540,000 withdrawn by Romania was properly viewed as his contribution to Romania's counsel fees.
Given the financial circumstances of the parties and the importance of need and ability to pay an award of counsel fees pendente lite, the denial of the credit Mattera sought was not an abuse of discretion that resulted in an unfair division of marital assets. See R. 5:3-5(c); Mani v. Mani, 183 N.J. 70, 94-95 (2005) (discussing proper application of N.J.S.A. 2A:34-23, and the factors set forth in Rule 5:3-5(c)).
Mattera's objection to the credits given Romania for the Mercedes, tax paid on marital assets and his objection to an award of credit in his favor, rather than immediate return of the $7500 held in an escrow account, lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).
We reach the same conclusion with respect to Mattera's objection to the denial of her requests for credits for funds she used to repair the marital residence and the tax credit Mattera applied to post-complaint earnings. Ibid.
Given the reasons for the judge's denial of a credit to Mattera for funds taken by Romania to pay counsel fees and litigation costs, Romania's claim of abuse of discretion relevant to the award of counsel fees and costs requires no additional comment. Ibid. And, Romania's objection to the trial court's exercise of discretion in denying interest on her share of Mattera's law practice is wholly lacking in merit. Ibid. During the same period, Romania had use of the marital residence and significant assets, a portion of which were ultimately awarded to Mattera.
This court also reviews a trial judge's determinations about alimony and child support for abuse of discretion. See Caplan v. Caplan, 182 N.J. 250, 271 (2005) (discussing discretionary decision concerning child support where guidelines are inapplicable); Heinl v. Heinl, 287 N.J. Super. 337, 345 (App. Div. 1996) (alimony). Thus, we may not disturb decisions that have reasonable support in the record. See Perkins, supra, 159 N.J. Super. at 247-48.
The supporting parties' ability to pay is a critical component of both alimony and child support. Miller v. Miller, 160 N.J. 408, 420 (1999); Christensen v. Christensen, 376 N.J. Super. 20, 25 (App. Div. 2005). The trial court found that Mattera's net income approximates $778,000 per year. Our review of the evidence submitted at trial discloses no support for that determination.
The testimony of Mattera's accountant, upon which the trial court relied, was given in response to questions posed by Romania's attorney that rested upon the unreasonable assumption that the law firm's receipts and expenses would remain constant throughout the year. The history of the firm's prior earnings, however, demonstrated that the attorney's underlying assumption was wide of the mark - fees collected varied significantly over the years. As the accountant explained before he was directed to answer over objection, if Mattera asked him to project net income from business prior to taxes, he would have asked Mattera about his pending cases and their status.
We recognize that there was evidence from which the trial court could, and did, reasonably question the ratio of revenue to expenses reported by Mattera. There is evidence that based upon gross receipts over the years and a more reasonable ratio of expenses to net revenue, would permit a finding of net business revenue higher than that reported. Nonetheless, in light of that evidence, net business revenue cannot be equated with net income available to Mattera.
The information provided by Romania's experts demonstrates that the income available to Mattera is net business income minus personal income tax on that business income. That evidence is set forth above in detail and there is no need to repeat it here. The problem is that the foundation for both support orders - that Mattera has net income approximating $65,000 per month - is mistaken. That error impacts both support orders and requires a remand.
Because we are remanding, we advise that neither the income the trial court attributed to Romania nor the amount she requires to maintain a standard of living reasonably comparable to that enjoyed during the marriage are clear. For example, we cannot be certain whether the trial court included a sum for savings in the amount sought by Romania or selected a different amount in recognition of the fact that prior savings may not be an appropriate measure for savings when these parents are paying college tuition.
Substantially for the reasons stated by the trial court, we affirm the judge's decision to dismiss Romania's claim for damages based on her allegation of malicious prosecution. Romania has failed to identify evidence in the record that would warrant a finding in her favor on that claim.
Affirmed in part and remanded for reconsideration of alimony, child support and college expenses in conformity with this opinion.